Japan's Parliament Passes Law Reclassifying Cryptocurrencies as Financial Instruments

Jul 15, 2026

Japan's parliament has passed historic amendments to the Financial Instruments and Exchange Act, reclassifying cryptocurrencies as financial assets. This shift lowers the tax rate on qualifying crypto gains from up to 55% to a flat 20% and establishes stricter regulations on insider trading. The legislation also lays the groundwork for domestic spot crypto ETFs, positioning Japan as a G7 leader in regulatory clarity while neighboring nations like India and Thailand maintain highly restrictive postures.

Japan crypto tax reform

▪The flat 20% tax rate applies only to specified crypto assets traded on licensed domestic exchanges; staking rewards, DeFi yields, NFT trading, and foreign platform activities remain taxed as miscellaneous income at rates up to 55%
▪The legislative changes introduce stricter insider trading prohibitions, mandatory annual disclosures for issuers of certain crypto assets, and increased maximum prison terms of ten years for unregistered operations.
▪Japan's parliament passed amendments to the Financial Instruments and Exchange Act, formally reclassifying cryptocurrencies as financial assets rather than payment methods.
▪The reclassification of cryptocurrencies under the Financial Instruments and Exchange Act establishes a flat tax rate of approximately 20% on qualifying crypto gains, down from a maximum miscellaneous income tax rate of 55%.

Stablecoin licensing framework

▪Japan's three major banks, MUFG, Mizuho, and SMBC, are advancing a joint yen stablecoin pilot on the Progmat ledger platform during fiscal year 2026.
▪Japan's June 2023 Payment Services Act amendments restricted stablecoin issuance to licensed domestic banks, trust companies, and fund transfer service providers with full reserve backing.
▪JPYC Inc. launched Japan's first licensed yen-pegged stablecoin, JPYC, in October 2025 after receiving its funds-transfer service provider license in August 2025.

Crypto ETF applications

▪SBI Holdings filed applications with Japan's Financial Services Agency in August 2025 for a spot Bitcoin-and-XRP ETF and a hybrid digital-gold crypto ETF.
▪The reclassification of 105 cryptocurrencies under the Financial Instruments and Exchange Act serves as the legal prerequisite for domestic crypto ETF eligibility, though first approvals are projected no earlier than fiscal 2028.

Government startup support policy

▪Japan's Comprehensive Startup Support Package targets raising annual startup investment to 10 trillion yen by fiscal 2027, producing 100 unicorn companies, and reaching 100,000 startups.
▪Prime Minister Sanae Takaichi delivered a video address at the WebX 2026 conference, pledging to expand state-backed financial support to Web3 startups under Japan's Comprehensive Startup Support Package.

G7 regulatory comparison

▪Japan's legislative progress contrasts with the United States, where the Digital Asset Market Clarity Act remains stalled on the Senate floor calendar as of July 2026.

Asia-Pacific crypto regulation

▪The Bank of Thailand is utilizing data-analytics tools to audit large stablecoin transactions, specifically targeting USDT to combat money laundering by scam call centers.
▪The Reserve Bank of India maintained its internal posture leaning toward the prohibition of cryptocurrencies, telling a parliamentary committee on July 2, 2026, that digital assets threaten emerging economies.