Japan’s House of Councillors has approved a revised Financial Instruments and Exchange Act that would formally place crypto assets under the country’s financial instruments regulatory framework, according to a report cited by ChainCatcher. The change means crypto would no longer be regulated only under the Payment Services Act as a means of payment.
The revision adds insider trading rules for the crypto market and places the sector under the oversight of the Securities and Exchange Surveillance Commission. It also sharply raises penalties for unlicensed operators, lifting the maximum prison term from three years to 10 years and increasing the ceiling for fines to 10 million yen.
The amended law is expected to take effect before July 2027. On the tax side, Japan is set to lower the tax rate on crypto trading profits from the current comprehensive taxation system, which can reach as high as 55%, to a flat 20% rate aligned with stocks under separate self-assessment taxation starting in January 2028. The Japanese market is also expected to lift its ban on crypto asset ETFs around the same time, with securities firms already preparing for entry.
Japan’s House of Councillors on Tuesday approved a revised Financial Instruments and Exchange Act, a move that would formally bring crypto assets under the country’s financial instruments regulatory framework, according to a report cited by ChainCatcher.
With the revision, crypto assets, or virtual currencies, would no longer be governed only as payment instruments under the Payment Services Act.
Crypto market oversight to expand
The new rules introduce an insider trading framework for the crypto market and place it under the oversight of the Securities and Exchange Surveillance Commission.
Penalties for unlicensed operators increased
The amendment also significantly raises penalties for unlicensed operators. The maximum prison term would increase from three years to 10 years, while the upper limit for fines would be raised to 10 million yen.
The revised law is expected to come into force before July 2027.
Tax and ETF changes laid out
On taxation and investment access, the new rules set out several major policy changes. Starting in January 2028, the tax rate on crypto asset trading profits in Japan would be reduced from the current comprehensive taxation system, which can be as high as 55%, to a flat 20% rate, matching stocks under separate self-assessment taxation.
Japan’s market is also expected to formally allow crypto asset ETFs around the same time. Securities firms have already started preparing to enter the market, according to the report.
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