Japan’s House of Representatives has passed a reform bill that could radically change the way crypto assets are regulated. The bill envisages assets such as Bitcoin, Ethereum and XRP being handled more closely to stocks and other financial products, rather than being evaluated predominantly under payment instrument rules.
New classification and tax plan
The regulatory proposal will now go to Japan’s House of Advisors for final approval. If the law is adopted, the new framework is expected to come into force in 2027, and the tax on crypto earnings will be reduced from a maximum of 55% to a fixed 20% in 2028.
The bill brings crypto assets within the scope of the Financial Instruments and Exchange Act, paving the way for the application of market rules to digital assets similar to stock market products. This change aims to create a clearer legal structure for investors and stock exchanges.
Japan Financial Services Agency stated that crypto assets are increasingly used as investment products by both domestic and foreign investors.
Japan Financial Services Agency announced that crypto accounts opened in the country exceeded 14 million. According to the agency, approximately 70% of these accounts belong to users with annual income below 7 million yen.
Since crypto earnings are evaluated within the scope of progressive income tax in the current system, investors may face a high tax burden. The proposed flat 20% rate would establish a structure similar to the tax on stocks and bonds.
Market rules may get tougher
The reform package covers not only taxes but also inspection and sanctions. It is planned to increase the maximum prison sentence for businesses providing unregistered crypto services from 3 to 10 years, and the fine will be increased to 10 million yen.
The bill also imposes restrictions on insider trading. Company executives, stock exchange employees and others with access to material information that has not yet been made public will be prohibited from trading based on developments such as listing decisions, delisting processes, major transactions or business failures.
The ruling Liberal Democratic Party stated that crypto ETFs could provide investors with a more accessible opportunity to invest in digital assets.
ETF prospect and sector impact
The new framework could also pave the way for crypto ETFs. If digital assets are accepted as financial instruments, reviewing and listing regulated investment products may become more feasible. It was reported that the Japan Stock Exchange Group is considering crypto-related ETF listings as early as 2027 if the legal infrastructure is completed.
Authorities emphasize that these changes are linked to the increase in the number of individual and institutional investors entering the sector. The reform is aimed to support innovative activities in Japan’s digital asset market while strengthening user protection.
It seems that the digital asset infrastructure in Japan has been expanding recently. While major banks are gearing up on stablecoin projects, companies like SBI Holdings are also expanding their crypto transaction and custody services.
