Japan reclassifies crypto as a financial asset, paves way for tax cuts
CoinDesk 2026-07-15 12:05:33
Context: Japanese lawmakers have passed a landmark bill reclassifying 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. This move 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. The legislation also includes a plan to cut the top tax rate on crypto income from as high as 55% to a flat 20% starting in 2028.
Key Facts
- The legislation amends the Financial Instruments and Exchange Act and the Payment Services Act, treating crypto as an investment alongside other financial instruments, rather than primarily as a payment tool.
- The new framework removes a key legal hurdle for future spot bitcoin exchange-traded funds (ETFs), and Financial Services Agency officials said Japan will now consider developing a regulatory framework for crypto ETFs.
- The maximum prison term for unregistered crypto operators is increased from three years to 10 years, and the maximum fine is increased from 3 million yen ($18,500) to 10 million yen.
- The tax-cutting proposal reduces the current crypto tax burden from as much as 55% to 20%, with the lower rate not expected to take effect until 2028, and the new structure splits the 20% tax between the national government and regional authorities at 15% and 5%, respectively.
- The crypto rules require cryptocurrency issuers to provide regular disclosures, while exchanges will face stricter investor protection and reporting requirements.