Japan’s parliament approved legislation on Wednesday that reclassifies cryptocurrencies as financial instruments under amended laws. The changes shift crypto from a payments regime to an investment framework and set the stage for potential spot Bitcoin ETFs.
The legislation amends the Financial Instruments and Exchange Act and the Payment Services Act. It is expected to take effect in 2027 and introduces stricter insider-trading rules, expanded disclosure requirements and tougher penalties for unregistered operators.
Maximum prison terms for unregistered crypto operators rise from three years to 10 years. Maximum fines increase from 3 million yen to 10 million yen. Issuers must provide regular disclosures and exchanges face stricter investor protection rules.
Lawmakers also approved a plan to cut the top tax rate on crypto income from as high as 55 percent to a flat 20 percent beginning in 2028. The lower rate splits into 15 percent national and 5 percent regional shares.
Financial Services Agency officials said Japan will now consider developing a regulatory framework for crypto ETFs, though no products were approved in the current legislation.
