Japan's Diet Swaps Crypto From "Payment" To "Product," Snips Tax To 20% ✂️

Japan's House of Councillors approved amendments to the Financial Instruments and Exchange Act on Wednesday, completing the bill's passage through both chambers of the Diet and classifying cryptocurrencies as financial products under securities-style rules. The legislation, passed by the lower house in mid-June following Cabinet approval on April 10, 2026, places roughly 105 digital assets under FIEA oversight and shifts them out of the Payment Services Act framework that previously treated them as payment methods.

The amended law introduces explicit insider trading prohibitions for crypto transactions, requires periodic disclosures from issuers of certain tokens, and raises penalties for unregistered operations. According to CoinPost, the maximum prison sentence for operating without registration will rise from three years to 10 years, while the maximum fine will increase from 3 million yen to 10 million yen, or about $18,500 to $61,600. Authorities said the framework is designed to bring market conduct rules in line with those applied to stocks and bonds.

Tax provisions attached to the legislation establish a separate category for crypto gains at an effective rate of about 20%, with a three-year loss carry-forward deduction. Japan currently taxes crypto profits as miscellaneous income at rates reaching as high as 55%. CoinPost reported that the new tax treatment is expected to take effect in January 2028, with enforcement scheduled to begin during fiscal year 2027. The law is set to take effect within one year of promulgation, with cabinet ordinances and supervisory guidelines to detail implementation.

The amendments also lay the legal groundwork for domestic spot cryptocurrency exchange-traded funds. CoinPost said the Japan Exchange Group is weighing the first local crypto ETF listings as early as 2027, with traditional financial institutions positioned to serve as issuers, though approval of spot bitcoin ETFs has not yet been confirmed. Prime Minister Sanae Takaichi told attendees at WebX 2026 earlier this month that Web3 forms part of Japan's national innovation strategy rather than a standalone crypto initiative, though her address did not announce new funding or immediate regulatory measures.