Jul 15, 2026, 12:05 p.m.

2 min read

National Diet Building of Japan (Parliament). (Wiiii/Wikimedia Commons)
Japanese lawmakers passed a landmark crypto bill classifying digital assets as a financial product. (Wiiii/Wikimedia Commons)

Summary

  • Japan reclassified cryptocurrencies as financial instruments, shifting them from a payments-focused regime to an investment framework under amended financial and payments laws set to take effect in 2027.
  • The legislation paves the way for potential spot bitcoin ETFs, increases penalties for unregistered crypto operators, and imposes stricter insider-trading, disclosure and investor-protection rules on issuers and exchanges.
  • Lawmakers also approved a plan to cut the top tax rate on crypto income from as high as 55% to a flat 20% starting in 2028.

Japan reclassified cryptocurrencies as financial instruments, a structural shift that establishes the legal framework for separate taxation of crypto assets and for future crypto exchange-traded funds (ETFs).

The legislation approved by Parliament on Wednesday amends the Financial Instruments and Exchange Act and the Payment Services Act (PSA). It shifts crypto from a framework in which it was primarily treated as a payment tool to one that treats it as an investment alongside other financial instruments. The new rules are expected to take effect in 2027.

The new framework also removes a key legal hurdle for future spot bitcoin exchange-traded funds (ETFs), although lawmakers did not approve any ETF products. Financial Services Agency officials said Japan will now consider developing a regulatory framework for crypto ETFs.

The legislation raises the maximum prison term for unregistered crypto operators from three years to 10 years and increases the maximum fine from 3 million yen ($18,500) to 10 million yen. It also introduces stricter insider-trading rules and expands disclosure requirements for crypto issuers and exchanges.

Lawmakers also approved the framework for reducing the current crypto tax burden from as much as 55% to 20%, although the lower rate is not expected to take effect until 2028.

The tax-cutting proposal was introduced late last year with the support of the government and the ruling coalition. That new structure splits the 20% tax between the national government and regional authorities at 15% and 5%, respectively.

The crypto rules will require cryptocurrency issuers to provide regular disclosures, while exchanges will face stricter investor protection and reporting requirements.

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Read full story at CoinDesk