Japan’s House of Representatives has approved a digital asset reform bill that would move cryptocurrencies closer to the regulatory treatment of stocks and other financial instruments. The bill would classify assets such as Bitcoin, Ethereum, and XRP under the Financial Instruments and Exchange Act instead of mainly treating them under payment rules.
The proposal now moves to the House of Councillors for final passage. If enacted, the framework is expected to take effect in 2027, while the planned crypto tax reduction from a maximum of 55% to a flat 20% is expected to apply from 2028.
What Would Japan’s Crypto Bill Change for Bitcoin and XRP?
Japan’s crypto bill would classify cryptocurrencies as financial instruments and apply stock-style market rules to digital assets. That change would bring assets such as Bitcoin, Ethereum, and XRP under a framework closer to securities products while creating clearer rules for investors and exchanges.
The Financial Services Agency said crypto assets are increasingly being used as investment products by domestic and foreign investors. Japan now has more than 14 million open crypto accounts, with users earning under 7 million yen, or about $43,600, accounting for roughly 70% of those accounts.
The bill would shift crypto oversight from the Payment Services Act toward the Financial Instruments and Exchange Act. That would place digital assets under rules designed for financial markets, including disclosure requirements, trading restrictions, and stronger enforcement powers.
How Would Japan’s 20% Crypto Tax Plan work?
The bill would reduce the crypto gains tax from a progressive rate of up to 55% to a flat 20%. The lower rate would match the tax treatment used for stocks and bonds and is expected to take effect in 2028 if the reform passes.
Under current rules, Japanese crypto investors can face high tax rates because gains are treated under a progressive income tax structure. The proposed flat rate would create a simpler tax system for digital asset gains.
The reform is intended to support a clearer market structure as more retail and institutional investors enter the sector. The FSA said the goal is to improve user protection while supporting innovation in Japan’s digital asset market.
The bill would also introduce tougher rules for unregistered crypto businesses. The maximum prison sentence for operating an unregistered crypto business would rise from three years to 10 years, while fines could increase to 10 million yen, or about $62,800.
When Will Japan Approve Crypto ETFs?
Japan’s new framework could open a path for crypto ETFs once digital assets are treated as financial instruments. The Japan Exchange Group is reportedly looking at crypto-linked ETF listings as early as 2027 if the legal framework is completed.
The ruling Liberal Democratic Party has said crypto ETFs could give investors more accessible ways to gain exposure to digital assets. A stock-style framework would make it easier for regulated investment products to be reviewed and listed.
The legislation would also add insider trading restrictions for crypto. Company insiders, exchange workers, and other parties with nonpublic material information would be barred from trading tokens based on undisclosed events, such as listing decisions, delistings, large trades, or business failures.
Crypto issuers would face stronger disclosure requirements. Projects would need to publish clear information about technology, token supply, and business finances. If a token issuer raises capital without an independent audit, ordinary investors would face a 2 million yen investment cap.
Japan’s reform comes as the country’s digital asset infrastructure grows. Major banks are preparing stablecoin projects, while firms such as SBI Holdings are expanding crypto trading and custody services.
