Japan reclassifies crypto as a financial asset, paves way for tax cuts

Policy Japan reclassifies crypto as a financial asset, paves way for tax cuts Lawmakers said crypto has outgrown its role as a payment method and requires rules designed for investment products. By Olivier Acuna | Edited by Sheldon Reback Jul 15, 2026, 12:05 p.m. 2 min read Make preferred on Share Share this article Copy link X icon X (Twitter) LinkedIn Facebook Email Make preferred on Japanese lawmakers passed a landmark crypto bill classifying digital assets as a financial product. (Wiiii/Wikimedia Commons) Summary Show Japan reclassified cryptocurrencies as financial instruments, shifting them from a payments-focused regime to an investment framework under amended financial and payments laws set to take effect in 2027. The legislation paves the way for potential spot bitcoin ETFs, increases penalties for unregistered crypto operators, and imposes stricter insider-trading, disclosure and investor-protection rules on issuers and exchanges. Lawmakers also approved a plan to cut the top tax rate on crypto income from as high as 55% to a flat 20% starting in 2028. Japan reclassified cryptocurrencies as financial instruments, a structural shift that establishes the legal framework for separate taxation of crypto assets and for future crypto exchange-traded funds (ETFs). The legislation approved by Parliament on Wednesday amends the Financial Instruments and Exchange Act and the Payment Services Act (PSA). It shifts crypto from a framework in which it was primarily treated as a payment tool to one that treats it as an investment alongside other financial instruments. The new rules are expected to take effect in 2027. The new framework also removes a key legal hurdle for future spot bitcoin exchange-traded funds (ETFs), although lawmakers did not approve any ETF products. Financial Services Agency officials said Japan will now consider developing a regulatory framework for crypto ETFs. The legislation raises the maximum prison term for unregistered crypto operators from three years to 10 years and increases the maximum fine from 3 million yen ($18,500) to 10 million yen. It also introduces stricter insider-trading rules and expands disclosure requirements for crypto issuers and exchanges. Lawmakers also approved the framework for reducing the current crypto tax burden from as much as 55% to 20%, although the lower rate is not expected to take effect until 2028. The tax-cutting proposal was introduced late last year with the support of the government and the ruling coalition. That new structure splits the 20% tax between the national government and regional authorities at 15% and 5%, respectively. The crypto rules will require cryptocurrency issuers to provide regular disclosures, while exchanges will face stricter investor protection and reporting requirements. Japan Regulation Latest Crypto News 1 Strategy feels 'very secure' until bitcoin reaches $8,000-$10,000, says CEO 5 minutes ago 2 Bitcoin rally cools as investors digest inflation data, oil clouds outlook 20 minutes ago 3 Crypto steadies as Middle East tensions counter U.S. inflation report boost 1 hour ago 4 Stripe mounts blockbuster $53 billion bid to buy PayPal 1 hour ago 5 Live markets: Bitcoin, ether ETFs draw inflows as majors rise as much as 5% 3 hours ago 6 UK plans first G7 digital sovereign bond by early 2027 3 hours ago 7 AI agentic payments enter mainstream as Visa, Mastercard, Ripple back x402 standard 6 hours ago 8 Bitcoin nears $65,000 as cooling U.S. inflation guts the Fed rate-hike trade 6 hours ago 9 U.S. CFTC moves to stop Kalshi from canceling trades as ordered by Michigan court 15 hours ago 10 Some U.S. Senate Democrats come out against Clarity Act, calling it a 'corrupt' bill 17 hours ago Latest Research Gate Leads Spot Market Share Gains as CEX Volumes Rise for First Time in Five Months Gate Leads Spot Market Share Gains as CEX Volumes Rise for First Time in Five Months CEX trading volumes rose for the first time in five months in June, with spot climbing 15.3% to $1.11T and RWA perpetual volumes surging to a record $311B. By CoinDesk Research Jul 13, 2026 CEX trading volumes rose for the first time in five months in June, with spot climbing 15.3% to $1.11T and RWA perpetual volumes surging to a record $311B. Why it matters : CEX trading volumes rose for the first time in five months in June, with spot climbing 15.3% to $1.11T and RWA perpetual volumes surging to a record $311B. View Full Report More From Policy U.S. CFTC moves to stop Kalshi from canceling trades as ordered by Michigan court Some U.S. Senate Democrats come out against Clarity Act, calling it a 'corrupt' bill Wikipedia blackout could hurt how AI engines like ChatGPT understand crypto