Japan’s lower house has approved a crypto bill that would bring digital assets under the Financial Instruments and Exchange Act, reclassifying them from payment-based instruments to financial assets. The proposal now heads to the upper chamber. One of its biggest changes is tax treatment: crypto gains currently taxed at up to 55% in some cases would move to a flat 20% rate.
Crypto rules would move closer to stock-market standards
The draft would align crypto trading rules, disclosure obligations, and supervisory standards more closely with those applied in traditional securities markets. Political analysts cited in the report said the broader framework could take effect as early as next year if final ratification is completed. Regulators would also receive wider authority to act against insider trading and market manipulation, two long-running issues across the sector.
Japan was one of the earliest jurisdictions to establish a licensing structure for crypto after exchange failures and uneven tax treatment in prior years. This bill extends that approach, aiming to create a more defined regulatory setup as institutional participation and retail interest continue to grow.
Bitcoin classification could support regulated ETF products
Under the proposal, Bitcoin would formally be treated as a financial asset. That change could give exchanges and asset managers firmer legal ground to launch crypto-linked investment products. In practice, it raises the prospect of regulated Bitcoin ETFs becoming available in Japan.
The report said Japan Exchange Group is preparing for crypto-tracking ETFs as early as next year. Such products would let investors gain price exposure through standard brokerage accounts instead of directly buying and holding Bitcoin. Japan-listed Metaplanet has recently attracted attention after accumulating more than 40,000 BTC; if ETF products arrive, institutional Bitcoin exposure in Japan may no longer be concentrated around corporate treasury strategies alone.
Ether would receive the same treatment, while stablecoins stay outside the bill
Ether is included under the same proposed classification and would also be recognized as a financial asset. The tax shift is a central feature of the bill: instead of the current regime, where crypto profits can face rates as high as 55%, a uniform 20% tax would apply. According to the report, tax relief is expected in 2028, while the wider regulatory structure may come into force earlier.
Stablecoins are not covered by this legislation and will remain under the existing payment-services framework. The report added that Japan approved its first yen-denominated stablecoin, JPYC, in fall 2025, while major banks have been launching new stablecoin projects in parallel.
Penalties for unlicensed activity would become much harsher
The proposed changes also raise the cost of operating outside the rules. Maximum prison terms for running an unlicensed crypto business would increase from 3 years to 10 years. The law is also designed to introduce insider-trading penalties for crypto markets that mirror those used for public securities.
As of April 1, Japan had 27 licensed crypto exchanges. The report said tighter compliance burdens and stronger regulatory pressure are expected to push smaller platforms toward mergers or market exits.