Japan has approved amendments to the Financial Instruments and Exchange Act that formally classify cryptocurrencies as financial products, marking one of the country’s biggest digital asset policy changes in recent years.
The legislation, approved by Japan’s House of Councillors on July 15, moves crypto regulation away from the Payment Services Act and places it under the country’s financial securities framework. The change also introduces stricter rules for crypto businesses, including tougher penalties for firms operating without registration.
🚨 BREAKING 🚨
🇯🇵 Japan to recognize crypto as “financial assets.” pic.twitter.com/R5CFZI6z3c
— Max Crypto (@MaxCrypto) July 15, 2026
The new framework also lays the legal groundwork for spot crypto exchange-traded funds (ETFs). Japan Exchange Group is reviewing plans to list spot crypto ETFs around 2027, while Finance Minister Satsuki Katayama recently confirmed that the government is reviewing rules that would allow such products to enter the domestic market.
Tax changes remain part of the plan
The amendment also supports a new tax structure for crypto investors. Under the proposal, crypto gains would move from Japan’s current progressive income tax system, which can reach 55%, to a separate self-reported tax of about 20%.
The proposal would also allow investors to carry forward losses for up to three years, bringing crypto taxation closer to the treatment of traditional financial investments. The tax changes will only take effect after the Financial Instruments and Exchange Act is fully implemented. If implementation begins in 2027, the revised tax system is expected to start in 2028.
Why did Japan move crypto under securities law?
Several countries already regulate digital assets through securities or investment laws rather than payment legislation. Hong Kong licenses virtual asset trading platforms through its securities regulator, while the United States continues expanding investment products such as spot Bitcoin ETFs under securities rules.
Japan’s decision follows the same direction but adds its own focus on taxation and investment products. Instead of treating crypto mainly as a payment method, the country is placing it alongside financial instruments that already operate under investor protection, disclosure requirements, and market supervision.
That structure could make it easier for institutional investors to enter Japan’s crypto market once ETF rules and the revised tax framework come into force. It also gives regulators a single legal framework for supervising crypto businesses as the country’s digital asset market continues to mature.
The country’s prime minister, Sanae Takaichi, reaffirmed the country’s commitment to Web3 and blockchain innovation, highlighting the sector’s role in Japan’s broader startup strategy rather than announcing new crypto-specific policies.
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