Japan’s parliament approved new amendments on Wednesday that will recognize cryptocurrencies as financial assets, a move that would put their regulation under the Financial Instruments and Exchange Act, according to Japanese Broadcaster NHK.
Crypto had previously been regulated mainly under Japan’s Payment Services Act, which treated it more as a payment method than an investment product.
With the latest change, cryptocurrency trading will become subject to rules closer to those governing stocks and other securities, including restrictions on trading based on insider information.
That could give regulators clearer grounds to pursue project founders, exchange employees and other people who trade before market-moving information becomes public.
The law also raises the maximum punishment for operating an unregistered crypto trading business from three years in prison and a fine of about $20,000 to 10 years and roughly $67,000.
The new regulations don’t limit themselves to the fight against insider trading. The regulations will require crypto exchanges to comply with the general structure of Japan’s financial services industry, according to Anderson Mori & Tomotsune Law Firm in Japan, according to Japanese law firm Anderson Mori & Tomotsune.
Additionally, some crypto issuers will have to make certain disclosure requirements similar to those made by firms issuing securities.
Crypto lenders will be subjected to regulation, and firms that offer wallets and other technologies to exchanges may face new notification and compliance requirements, per the report.
Economic Plan
Separately, Japanese Prime Minister Sanae Takaichi on Wednesday said she saw no link between her government's draft economic blueprint and a recent market rout that has driven Japanese government bond (JGB) yields to multi-decade highs.
“I do not believe that a single draft government document, which has not even been approved by the cabinet yet, is the cause of the market shock,” Takaichi told parliament.
Concerns about political interference in monetary policy have grown since the government in its draft blueprint said it was "very important for monetary policy to be guided appropriately to achieve a stronger economy". The draft was followed by a selloff in JGBs.
Takaichi also said interest rates, as well as foreign exchange rates, are "determined by a variety of factors. Looking at today's market moves, for example, there are influences from US interest rates and employment data," she said.
The prime minister said she saw the current debate on temporary cuts in food sales tax as a chance to establish a system in which consumption tax rates could be changed flexibly.
Asked about the yen's persistent weakness, she said boosting domestic investment and strengthening international competitiveness would raise potential growth and maintain confidence in the yen.
