A comprehensive bill that could redefine the place of digital assets in the financial system is advancing through parliament in Japan. The proposal envisions moving Bitcoin and Ether out of their current payment instrument approach and into a security-like framework. If the regulation is implemented, there will be a significant reduction in tax rates, tighter market surveillance and a new basis for regulated investment products.
Scope of process and regulation in parliament
The lower house of the Japanese parliament accepted the regulation in question on Thursday and sent it to the upper house for evaluation. Political observers state that after final approval, the new structure could be put into operation next year. The proposal would amend the country’s Financial Instruments and Exchange Act to bring crypto assets under traditional financial supervision.
The bill envisages classifying crypto assets as financial instruments, changing their current payment-oriented status; thus bringing trading rules, transparency obligations and auditing standards closer to equity markets.
With this change, transaction behavior, public disclosure obligations and regulatory monitoring mechanisms are expected to approach the rules in stock markets. Among the notable headlines of the proposal is that regulators will gain broader authority against violations such as insider trading and market manipulation.
Japan was one of the earliest countries to establish a licensing framework in the field of crypto, following past stock market crashes and inconsistencies in tax policies. The latest proposal is seen as a continuation of the search for a clearer and more comprehensive structure in response to the increasing interest of both institutional investors and individual users.
Bitcoin ETF path may be opened
Within the scope of the proposal, Bitcoin is among the assets to be defined as financial instruments. This could provide trading platforms and fund managers with a clearer legal basis for offering crypto-related investment products. This could pave the way for Bitcoin ETFs in authorized markets in Japan.
Mini dictionary: ETF stands for exchange-traded fund. It offers investors access to the price movement of an asset through standard brokerage accounts without purchasing it directly.
Japan Exchange Group stands out as the country’s main exchange operator, and it is estimated that ETF products that track crypto prices could hit the market as early as next year. Such a step is expected to make it easier for investors to access Bitcoin through the regulated exchange infrastructure.
Metaplanet, mentioned in the news, is one of the Japan-based public companies that has recently attracted attention with its Bitcoin accumulation. While it is reported that the company has assets exceeding 40,000 Bitcoins, it is stated that if ETF products come into play, there may be direct competition with corporate treasury strategies.
Ether, tax reduction and its impact on stock markets
The proposal envisages the same classification for Ether as Bitcoin. In addition, a fixed 20% structure is planned for the taxation of crypto earnings, instead of the current rates of up to 55% in some cases. The tax change is expected to start in 2028, with the broader regulatory framework coming into force earlier.
Stablecoins are excluded from this offer. These assets will remain under current payment services regulations. In the news, it was shared that Japan approved the first yen-based stablecoin, JPYC, in the autumn of 2025 and that major banks also initiated joint stablecoin initiatives.
The new rules will increase not only investment products but also the audit burden of the sector. The maximum prison sentence for crypto operators operating without permission is planned to be increased from 3 to 10 years. It is also aimed to impose similar sanctions on insider trading in the crypto market as for violations in publicly traded securities. While there are 27 licensed crypto exchanges in Japan as of April 1, it is evaluated that the increasing compliance and audit burden may create pressure on small platforms to merge or withdraw from the market.
