Japan Passes Landmark Bill Recognizing Crypto As Financial Products, Cuts Tax Rate

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Japan has passed landmark legislation that reclassifies cryptocurrencies as financial products under the country’s Financial Instruments and Exchange Act (FIEA), marking one of the most significant overhauls of its digital asset framework since recognizing Bitcoin as legal property in 2017. The legislation, approved by Japan’s parliament on Tuesday, lays the legal foundation for treating cryptocurrencies more like traditional financial instruments, opening the door to products such as crypto exchange-traded funds (ETFs) and strengthening investor protections. It also clears the way for an upcoming reduction in crypto investment taxes from 55% to a flat 20%, showing Japan’s broader effort to position itself as one of Asia’s leading digital asset markets. JUST IN: 🇯🇵 Japan officially passes law recognizing crypto as “financial assets.” — Watcher.Guru (@WatcherGuru) July 15, 2026 The new legislation shifts the regulation of cryptocurrencies from the Payment Services Act to the Financial Instruments and Exchange Act, placing digital assets under the same legal framework that governs securities and other financial products. According to the bill, the amendment was proposed: The move expands the Financial Services Agency’s oversight of crypto markets while introducing stronger disclosure requirements and investor protections. It also creates a clearer legal pathway for the eventual approval of regulated crypto investment products, including spot crypto ETFs, which have gained traction in other major markets. The reclassification reflects a broader shift in how Japan views digital assets. Among the most anticipated aspects of the reform is the government’s plan to reduce the tax burden on crypto investors. Currently, profits from cryptocurrency trading are generally treated as miscellaneous income and taxed at progressive rates that can reach 55%, depending on an individual’s total taxable income. Under the new framework, lawmakers intend to align crypto taxation with listed securities by introducing a flat 20% capital gains tax on eligible crypto investments. However, the lower tax rate does not take effect immediately. Instead, the legislation establishes the legal framework needed for the tax reform, which could be implemented by 2028 upon approval. Until then, the existing tax rules remain in force. For investors, the significance is less about the immediate tax impact than the government’s clear policy direction toward creating a more competitive environment for digital asset investment. Altogether, the legislation is expected to accelerate institutional participation in Japan’s crypto market. Under the FIEA, regulators will have a more established legal basis for overseeing investment products, custody providers and other financial services linked to cryptocurrencies. Related: Alfa-Bank, Russia’s Largest Private Bank, Tests Crypto Trading Ahead of Regulatory Rollout Industry observers believe the reforms could eventually support the launch of domestic spot crypto ETFs, while encouraging banks, brokerages and asset managers to expand their digital asset offerings under a familiar regulatory framework. The changes also align with Japan’s broader efforts to modernize its financial sector through blockchain technology. In recent months, several Japanese companies have expanded their digital asset initiatives, including Bitcoin treasury strategies, tokenization projects and stablecoin infrastructure.

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