Japan's Lower House Passes Bill to Regulate Crypto as Financial Instruments, Enabling ETFs and Tax Cuts

Jun 11, 2026

Japan's Lower House has passed a bill to regulate cryptocurrencies as financial instruments, a move set to enable crypto ETFs and attract institutional investment. The legislation, effective in 2027, will slash the capital gains tax from a high of 55% to 20% by 2028 and impose stricter rules, including an insider trading ban and harsher penalties for unregistered operators.

Crypto reclassification as securities

▪The legislation moves crypto regulation from the Payment Services Act to the Financial Instruments and Exchange Act.
▪The new regulations are expected to take effect in 2027 after the bill passes the Upper House.
▪Stablecoins are excluded from the new framework and will continue to be regulated as payment services.
▪Japan's Lower House of Representatives passed a bill to reclassify cryptocurrencies as 'financial instruments,' similar to stocks and bonds.

Capital gains tax reduction

▪The new 20% tax rate, which aligns with taxes on stocks and bonds, is expected to take effect in 2028.
▪The capital gains tax on crypto assets will be reduced from a maximum of 55% to a 20% flat rate.

Crypto ETF authorization

▪The reclassification enables the creation and listing of crypto exchange-traded funds (ETFs).
▪The operator of the Tokyo Stock Exchange, Japan Exchange Group, has expressed interest in listing crypto ETFs once the law is effective.

Insider trading penalties

▪Fines for operating without registration will increase to as much as 10 million yen ($62,800).
▪The maximum prison sentence for operating an unregistered crypto business will increase from three years to 10 years.
▪The law introduces an insider trading ban for crypto, mirroring rules for the stock market.

Exchange consolidation pressure

▪Stricter compliance may force about 50% of Japan's 27 registered crypto exchanges to shut down, according to consultant Shohei Matsumoto.
▪The new rules might also affect businesses like Metaplanet, which holds Bitcoin as a substitute for direct holdings by stock investors.

Institutional product launches

▪The Financial Services Agency stated the framework aims to improve user protection while promoting innovation for domestic and foreign investors.
▪Major financial firms, including Nomura Holdings and SBI Holdings, plan to create crypto-related exchange-traded products.