Japan has taken a major step toward tightening oversight of the cryptocurrency sector, as the government approved a bill to amend the Financial Instruments and Exchange Act during a cabinet meeting on April 10.
The proposed changes aim to bring crypto assets under a more stringent regulatory framework, reflecting their growing role as investment vehicles rather than merely payment tools.
Under the new framework, crypto assets will be subject to rules similar to traditional financial instruments, including a ban on insider trading based on non-public information.
The move is expected to enhance transparency and curb unfair practices in the rapidly evolving digital asset market.
The Financial Services Agency, which previously regulated cryptocurrencies under the Payment Services Act, is leading the shift. The transition highlights a broader policy change as authorities respond to increased retail and institutional participation in crypto markets.
In addition, the bill introduces stricter compliance requirements for crypto-related businesses.
Companies issuing digital assets may be required to disclose key information annually, a measure designed to improve investor awareness and promote market discipline.
The terminology for registered operators is also set to change, signaling a more investment-focused regulatory approach.
Penalties for violations will be significantly increased. Individuals operating unregistered crypto businesses could face prison sentences of up to 10 years, compared to the current maximum of three years, along with fines reaching 10 million yen.
The tougher penalties underscore the government’s commitment to investor protection.
Speaking after the cabinet meeting, Satsuki Katayama emphasized the importance of adapting to changes in financial markets while ensuring fairness and transparency.
If approved during the current Diet session, the revised law is expected to come into effect in fiscal year 2027.
