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Japan’s lower house has passed a bill that would move crypto assets under the Financial Instruments and Exchange Act, bringing digital assets closer to Japan’s securities framework for stocks, bonds and investment trusts.
The bill now heads to the upper house. If passed, the framework is expected to take effect next year and could open a path for crypto exchange-traded funds and lower tax treatment for some digital asset gains.
Crypto Would Move Into FIEA Rules
The bill would shift crypto trading rules from Japan’s payment-services framework into the country’s financial instruments regime. That would place exchanges and crypto intermediaries under stricter investment-market rules.
The proposal adds stock-market-style protections, including tougher disclosure duties, insider trading restrictions and higher penalties for unregistered crypto business activity. It also gives securities regulators more tools to act against unlawful operators.
Insider Trading Rules Would Apply
Japan has been moving in this direction for more than a year. The Financial Services Agency planned to give crypto assets legal status as financial products and apply insider trading restrictions to trades based on undisclosed information.
That would bring crypto closer to the enforcement model used for traditional financial products.
Tax Reform Could Cut Rates to 20%
The bill also supports a tax reform path that could bring crypto gains closer to Japan’s treatment of stock trading. Current crypto gains can be taxed as miscellaneous income at rates of up to 55%, while the proposed system would move eligible gains toward a flat 20% rate.
That tax change is not immediate. Reports in Japan said the 20% separate taxation model is expected from January 2028 if the Financial Instruments and Exchange Act reform takes effect in the 2027 fiscal year. Lower rates would address a long-running complaint from domestic crypto investors.
LDP Panel Pushes Crypto ETF Framework
The reform also gives Japan a clearer route toward crypto ETFs. A ruling Liberal Democratic Party panel urged the government this month to create a legal framework for crypto ETFs, saying the products could give investors an easier way to gain exposure without holding tokens directly.
That would bring Japan closer to markets where spot crypto ETFs have already become part of regulated investment channels. Domestic ETFs would still need product rules, issuer approvals and exchange processes before launch.
The bill now moves to the upper house, where passage would give regulators the legal base to develop ETF rules and tax changes.
