Japan to Regulate Virtual Currencies as Financial Instruments; Insider Trading to Carry Up to 10 Years’ Imprisonment

According to the Nikkei, Japan’s Cabinet formally approved an amendment to the Financial Instruments and Exchange Act (FIEA) on April 10. This amendment marks the first time that crypto assets (virtual currencies) have been brought under Japan’s financial instruments regulatory framework. It explicitly prohibits insider trading based on non-public information and requires issuers to make annual disclosures. Regulatory authority over crypto assets will thus shift formally from the Payment Services Act to the FIEA; accordingly, registered operators’ official designation will change from “Crypto Asset Exchange Operators” to “Crypto Asset Trading Operators.” Regarding penalties, the maximum term of imprisonment for unlicensed crypto asset sales operations has been increased from three years to ten years, and the maximum fine has risen from ¥3 million to ¥10 million.