Japan’s parliament passed an amendment on Wednesday that reclassifies cryptocurrency as a “financial asset,” a shift that pulls bitcoin and other digital assets from the country’s payments system into the framework that governs stocks, bonds and investment funds, according to a new report. a report From public broadcaster NHK.
The change strips cryptocurrencies of their previous status under the Payment Services Act, where regulators treated them as a means of settlement, and incorporates them into the Financial Instruments and Exchange Act (FIEA), the same law that oversees traditional securities.
the Modification moves bitcoin And other cryptocurrencies under one standard for investor protection. The change takes effect within one year, with a target of fiscal year 2027, NHK reported.
Japan’s New Authority on Bitcoin and the Crypto Asset Class
The Japanese Cabinet first approved the measure as a draft amendment in April 2026, but the move only sent the bill to Parliament for discussion. Wednesday’s vote marks the final enactment of the law, along with formal approval of a separate plan to reduce the top tax rate on cryptocurrency gains from 55% to 20% starting in 2028.
The move reshapes how Japan oversees the asset class. As financial instruments, cryptoassets now fall under insider trading rules that prevent issuers, exchange operators, and other parties from accessing non-public information from trading prior to events such as token listings, delisting, or major technical incidents.
Stock exchanges face new disclosure obligations. Platforms must publish data about each token’s provenance, blockchain design, and volatility profile, a standard that reflects the reporting requirements imposed on securities firms. Regulators have also gained broader market oversight power over the sector, according to local reports.
Penalties escalate under the new law. The maximum prison sentence for unregistered cryptocurrency operators rises from three years to 10 years, while the maximum fine increases from 3 million yen to 10 million yen, roughly $62,000. Stricter enforcement signals a move to treat cryptocurrency misconduct as seriously as securities fraud.
The Path to Bitcoin ETFs and Lower Taxes
Reclassification has two consequences beyond mere compliance. First, it opens the way for Bitcoin exchange-traded funds. Since the FIEA governs the products that funds can hold, moving cryptocurrencies under its umbrella removes a structural barrier preventing Japanese asset managers from launching regulated bitcoin ETFs.
Second, it paves the way for tax reform. Japan taxes cryptocurrency gains as miscellaneous income at rates of up to 55 percent, among the highest of any major market. Lawmakers approved the plan Reduce the top rate to 20 percentThis is the level that corresponds to the tax on stock gains. The reduction, linked to the 2026 tax reform scheme, will take effect in 2028.
The fixes arrive as Japan accelerates its broader Web3 crackdown Regulators weigh reserve requirements for exchanges Which are similar to the reserves held by securities companies. User accounts on Japanese exchanges have grown, and local cryptocurrency companies are preparing for a broader base of retail investors.
For an industry that has long viewed Japan as a cautious early mover, the vote represents a decisive shift toward legitimacy.
The state that served as Template for organizing encryption It is now working to align digital assets with its capital markets, a decision that may put pressure on other jurisdictions to follow.
