Japan Advances Crypto Bill to Reclassify Digital Assets and Cut Taxes to 20%
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Key Takeaways
Japan is advancing a crypto reform bill that would classify digital assets as financial products and cut taxes on eligible crypto gains to 20%.
The proposal would introduce stricter disclosure requirements, enhanced exchange oversight, and insider trading rules while paving the way for crypto ETFs.
Staking rewards, DeFi yields, NFTs, and transactions on foreign exchanges would remain subject to higher tax rates.
Japan moved a step closer to overhauling its crypto rules after a key parliamentary committee advanced legislation that would reclassify digital assets as financial products and cut the top tax on crypto gains to a flat 20%. The bill cleared the Committee on Financial Affairs on June 10, with a plenary vote still pending final confirmation.
Driven by the Financial Services Agency, the reform would move crypto transaction rules out of the Payment Services Act and place them under the Financial Instruments and Exchange Act, the framework that governs stocks and bonds.
What the Bill Changes
Crypto gains are currently taxed as miscellaneous income at progressive rates reaching 55%. The bill would replace that with a separate flat rate of 20% and enable loss carryforwards, both of which align crypto with securities.
BULLISH: Japan proposes reducing crypto capital gains tax from up to 55% to 20%.
The move comes as Japan seeks to classify crypto assets under a framework similar to stocks and bonds. pic.twitter.com/dpR56eflIv
Roughly 105 tokens listed on domestic-licensed exchanges, including Bitcoin (BTC) and Ether (ETH), are expected to qualify, with disclosure requirements attached.
The tax change is slated for 2028 for individual traders, subject to final passage, because it depends on the reclassification amendments passing first. A corporate exemption on unrealized gains began on April 1, 2026.
Investor Protections and Tougher Penalties
The bill pairs tax relief with stricter rules. It would ban insider trading on non-public information and impose penalties in line with those for listed securities.
Crypto firms would face mandatory disclosure and annual transparency reporting, and exchange oversight would tighten.
The maximum prison term for unregistered operators would rise from three years to 10 years. The measure builds on April 2026 amendments to the Exchange Act that reclassified crypto as financial instruments and introduced insider-trading restrictions.
Crypto ETFs and Investment Products
Japan still has no domestic crypto ETFs. Nomura and SBI are preparing crypto-integrated investment trusts pending FSA approval, and the reclassification under the Exchange Act is the legal step required before such products can list.
Japan’s new crypto bill also opens the door to crypto ETFs. | Source: @BullTheoryio
Asset managers have pointed to mid-2026 as the target for the first spot Bitcoin vehicles, although approval timelines remain pending with the FSA.
What Stays Taxed at Higher Rates
The relief would not apply across the board. Staking rewards, lending and DeFi yields, NFTs, and trades on foreign or unregistered exchanges would stay classified as miscellaneous income at rates up to 55%, creating a two-tier system.
Stablecoins also remain under the payment services framework rather than the securities regime.
Other Crypto Developments in Japan
Movement on the bill has run alongside a busy stretch for Japanese digital finance:
Japan’s three megabanks, MUFG, Sumitomo Mitsui, and Mizuho, plan to jointly issue a yen stablecoin for live commercial transactions during fiscal 2026, built on the Progmat ledger platform and structured through a trust, with a dollar version to follow. The plan extends an FSA-supervised pilot that began in November 2025.
JPYC, the country’s first yen stablecoin issued in late 2025, was designated a money transfer service provider by the FSA in April 2026, raised close to $30 million in Series B funding, joined by Metaplanet, and added regional bank partners, including Hokkaido Bank and Yokohama Bank.
SBI Holdings and Startale launched JPYSC, a trust-bank-backed yen stablecoin, in February 2026, and the Japan Blockchain Foundation announced EJPY on Japan Open Chain and Ethereum in May. Sony Bank partnered with JPYC for retail-focused yen tokens.
The FSA opened a public consultation on licensing, stablecoin issuance, taxation, and custody, aiming to finalize the framework by the end of 2026, after Finance Minister Satsuki Katayama designated 2026 a year for financial reform.
Industry Reaction and Timeline
Koichi Kano, Japan head at market maker QCP Group, said the legislation gives market participants long-awaited clarity.
Some committee members called the proposals “too heavy-handed” and urged the FSA to balance investor protection with market viability, while SBI’s chief executive had earlier criticized the pace as “extremely slow.”
When Yoshitaka Kitao says "Too late," the industry listens. 🏛️🚫
As the head of SBI Holdings and a massive advocate for XRP, Kitao knows Japan can’t afford to wait until 2028 for Crypto ETFs. While regulators deliberate, SBI is already building the infrastructure. Speed is… pic.twitter.com/3moC5wI6x0
Legal revisions in Japan typically take about a year to promulgate after Diet approval, leaving the rollout dependent on the votes still ahead.
Disclaimer:
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Dr. Guneet Kaur is a senior editor at CCN.com and a Science Fellow at Exponential Science. She is a fintech and blockchain expert with extensive experience in digital finance education, blockchain ecosystems, and cryptocurrency markets. She has worked with global media such as Cointelegraph, as well as education and blockchain platforms, to design and lead strategic content and learning initiatives. As an educator and assessor for top-tier executive programs, she bridges real-world fintech trends with academic insight.
Dr. Kaur is also a published researcher and peer reviewer across fintech and data science journals, including Financial Innovation Journal and International Journal of Big Data Intelligence and Applications. Her work spans data-driven analysis, Web3 innovation, and technical content development. With a strong foundation in both industry and academia, she translates complex financial technologies into practical applications, empowering learners, professionals, and institutions across the rapidly evolving digital finance landscape.
