Japan bill advances to reclassify crypto, clears path for ETFs

Japan’s House of Representatives advanced a bill to reclassify crypto assets under the country’s financial instruments framework. The legislation would move crypto rules from the Payment Services Act into the Financial Instruments and Exchange Act and would allow regulated crypto-tracking exchange-traded funds.

The Committee on Financial Affairs cleared the bill on June 10. Lawmakers expect the measure to proceed to the Upper House, with the new regulatory framework scheduled to take effect after parliamentary approval next year. Separate tax-code revisions tied to the bill are planned for 2028.

Under the draft law, crypto assets handled by local exchanges such as Bitcoin and Ether would be treated as financial products distinct from securities. The Financial Services Agency has proposed disclosure obligations for crypto-asset transaction business operators and issuers, tighter oversight of exchanges, explicit restrictions on insider trading, and stronger penalties for operators that fail to register.

The draft would require operators to publish information on the crypto assets they handle. Issuers of certain tokens would face disclosure requirements when conducting initial offerings or secondary distributions.

Reclassifying crypto under the Financial Instruments and Exchange Act would permit the creation of regulated crypto-tracking ETFs in Japan, giving investors access to digital asset exposure through regulated investment funds rather than only through crypto exchanges or companies that hold tokens.

The proposal would also change tax treatment of crypto gains. Current taxation can reach rates up to 55 percent. The bill would replace that structure with a 20 percent flat capital gains rate for cryptocurrencies, with the tax change scheduled to take effect in 2028.

Official parliamentary records show the bill passed the Financial Affairs Committee on June 10. Materials from the Financial Services Agency dated April 2026 set out the planned regulatory changes and the specific rules that would apply under the Financial Instruments and Exchange Act.

Regulatory guidance and earlier government signals in late 2025 and 2026 described an intention to shift crypto oversight from a payments-focused regime to one governed by financial market rules. If enacted, the legislation would change the legal and tax framework that applies to crypto businesses and token issuers operating in Japan.