Japan moves to fold crypto into securities law, cuts tax to 20% and paves way for ETFs
Japan’s lower house has approved a sweeping crypto bill that would bring digital assets under the same legal framework as stocks, slash the top tax rate on crypto gains to 20%, and create a clear pathway for crypto exchange-traded funds (ETFs) and broader institutional participation, Bloomberg reports.
What changed
- Reclassification: The bill would treat cryptocurrencies as financial instruments under the Financial Instruments and Exchange Act (FIEA), putting crypto trading under the same regulatory regime as traditional securities.
- Taxes: The maximum tax on crypto gains would fall from the current top rate of 55% to a flat 20%—matching stocks and bonds. The tax changes are slated to take effect in 2028.
- ETF pathway: By bringing crypto into the FIEA, the legislation opens the door to regulated crypto-linked ETFs. Japan Exchange Group has indicated ETFs could begin listing as early as next year if the legal framework is finalized.
- Enforcement and penalties: Insider trading rules for crypto would be aligned with those for listed securities. Penalties for unregistered crypto selling would be increased sharply, with the maximum prison term rising from three years to 10 years.
- Disclosure and reporting: Additional disclosure obligations and annual reporting requirements for crypto issuers are expected; exchanges operating without licenses face tougher penalties.
Where the bill stands
The lower house approved the proposal on Thursday; it now heads to the upper house and, if passed, key parts of the regime could take effect next year. Tax changes are expected to be implemented in 2028, giving investors and firms time to adapt.
Why regulators say this matters
Masato Yoshizawa, a representative from the Financial Services Agency’s policy and markets bureau, told Bloomberg the goal is to “foster more innovation by creating a sound trading environment.” Officials emphasize the move is designed to enable healthy market growth rather than to endorse crypto assets themselves.
Industry reaction
Market participants welcomed the clarity. Koichi Kano, head of Japan for crypto market-maker QCP Group, said the bill provides long-awaited regulatory certainty that makes it easier for firms to operate and expand in Japan. Hinza Asif, president of the Asia Web3 Alliance, told Bloomberg that stronger enforcement measures could help build trust and attract more participants.
Stablecoins regulated separately
The bill keeps stablecoins under Japan’s payment services framework rather than folding them into the FIEA. Meanwhile, Japan’s big banks are already building regulated digital-asset rails: MUFG Bank, Sumitomo Mitsui Banking Corporation and Mizuho Bank plan to start live transactions using a jointly issued stablecoin in fiscal 2026 after an FSA-backed pilot of stablecoin issuance and cross-border payments in late 2025.
Bottom line
If approved by the upper house and implemented as currently proposed, the reforms would be one of the most significant regulatory shifts in Japan’s crypto landscape—lowering tax burdens for investors, opening the door to crypto ETFs, aligning enforcement with securities rules, and accelerating institutional participation in digital assets.
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