Key facts
- Japan's parliament advanced a bill to reclassify crypto assets as financial instruments.
- The bill proposes lowering the maximum capital gains tax on crypto holdings from 55% to a flat 20%.
- Stricter trading rules, including penalties for insider trading, will be introduced.
- The reforms are expected to take effect in fiscal year 2027 or 2028.
- Crypto-tracking ETFs are expected to list on the Tokyo Stock Exchange as soon as 2027.
Japan's parliament is poised to pass legislation that reclassifies cryptocurrencies as financial instruments, moving them under a regulatory regime similar to stocks and bonds. The bill, approved by the House of Representatives' Finance and Financial Affairs Committee on June 10, aims to foster innovation and market growth by creating a clearer legal environment for digital assets.
A key provision of the bill is the reduction of the maximum capital gains tax on crypto holdings from the current 55% to a flat 20%, aligning it with taxes on traditional securities. This change is intended to make Japan a more attractive destination for crypto investment and business.
In addition to tax reforms, the legislation introduces stricter trading rules, including prohibitions against insider trading with penalties comparable to those for listed securities. The maximum prison sentence for unregistered crypto sellers will be raised to 10 years from the current three. These measures are designed to build a high-trust ecosystem and enhance investor protection.
The reforms are expected to take effect in fiscal year 2027 or 2028, following approval by the upper house. While stablecoins will continue to be regulated as payment services, the new framework for other tokens is anticipated to pave the way for the listing of crypto-tracking exchange-traded funds (ETFs) as early as 2027.