Japan’s government has officially classified cryptocurrencies as financial products, marking a shift in how the country plans to regulate digital assets.
The new classification places cryptocurrencies such as Bitcoin (CRYPTO: $BTC) under the Financial Instruments and Exchange Act, a framework used for stocks and other securities.
If passed during the current parliamentary session, the new crypto classification could take effect as early as 2027.
More From Cryptoprowl:
Until now, Japan has treated cryptocurrencies that also include Ethereum (CRYPTO: $ETH) as a payment tool under the Payment Services Act.
The previous approach focused on custody, anti-money laundering checks, and exchange registration.
The new rules ban insider trading related to digital assets and require that crypto issuers publish annual reports.
Operating without registration could receive up to 10 years in prison and fines could increase to $62,800 U.S. under the new regulatory classification.
In a press release, Japan’s Minister for Financial Services said the change will “expand the supply of growth capital in response to changes in the financial and capital markets.”
Bitcoin is currently trading at $73,000 U.S., having declined from an all-time high of $126,000 U.S. reached last October.