Japan’s House of Representatives has passed a historic bill reclassifying cryptocurrencies as financial instruments under the Financial Instruments and Exchange Act, aligning digital assets with traditional securities like stocks. The legislation, set to take effect in 2028, will dramatically lower the tax rate on crypto profits from a maximum of 55% to a flat 20%, matching the rate for listed equities. The bill also paves the way for crypto exchange-traded funds (ETFs) and introduces stricter penalties for insider trading and unregistered exchanges.
Once the amendment is formally enacted next year, the Japan Exchange Group (JPX) will be able to list ETFs tracking Bitcoin and Ethereum, opening regulated investment vehicles to institutional and retail investors. The move is expected to boost liquidity and mainstream adoption in the world’s third-largest economy.
The new framework imposes insider trading rules identical to those for stocks and increases maximum prison sentences for operating unregistered crypto exchanges from three to ten years. Officials say the reforms aim to foster innovation while creating a sound trading environment. “We aim to foster more innovation by creating a sound trading environment,” said Masato Yoshizawa of Japan’s Financial Services Agency, emphasizing that regulators support market growth, not the assets themselves.
Market observers expect consolidation among Japan’s 27 smaller registered exchanges due to higher compliance costs. Companies like Metaplanet, which hold large crypto reserves, may see their strategic edge diminish as the tax burden equalizes. Meanwhile, major banks including MUFG, Sumitomo Mitsui, and Mizuho are advancing a stablecoin project, complementing the broader crypto push.