Japan Moves Crypto Reform Bill Forward, Eyeing 20% Flat Gains Tax
Japan's House of Representatives has passed a sweeping digital asset reform bill that would shift cryptocurrencies toward the same regulatory lane as stocks and other financial products. The legislation would bring tokens such as Bitcoin, Ethereum and XRP under the Financial Instruments and Exchange Act (FIEA), moving oversight away from a framework primarily centered on payment rules. The bill now heads to the House of Councillors for final approval.
If enacted, the new regulatory regime is slated to begin in 2027. A separate tax change embedded in the reform would cut crypto gains taxation from today's progressive structure—which can reach 55%—to a flat 20%, expected to apply from 2028.
Under the proposal, crypto assets would be treated as financial instruments and subject to market-style rules similar to those governing securities products. That would introduce clearer investor protections and exchange obligations, including disclosure requirements, trading restrictions and stronger enforcement authorities.
Japan's Financial Services Agency (FSA) said crypto is increasingly used as an investment product by both domestic and overseas investors. The country has more than 14 million open crypto accounts; users earning under 7 million yen (about $43,600) make up roughly 70% of accounts.
On taxation, the reform would align crypto with the treatment of stocks and bonds by replacing the current progressive income tax approach with a simpler flat 20% rate on gains.
The bill also tightens penalties for unregistered crypto operators. The maximum prison term would increase from three years to 10 years, and fines could rise to 10 million yen (about $62,800).
The planned shift under FIEA could also pave the way for crypto exchange-traded funds. Japan Exchange Group is reportedly considering crypto-linked ETF listings as early as 2027 if the legal framework is completed. The ruling Liberal Democratic Party has argued that crypto ETFs could offer investors an easier route to gain exposure to digital assets.
The legislation would further introduce insider trading-style restrictions for crypto markets. Company insiders, exchange employees and other parties with material nonpublic information would be prohibited from trading tokens based on undisclosed events such as listings and delistings, large trades or business failures.
Disclosure standards for issuers would be strengthened as well. Projects would be required to provide clear information on technology, token supply and financial condition. If a token issuer raises capital without an independent audit, ordinary investors would face a 2 million yen investment cap.
Japan's push comes as its digital asset infrastructure expands. Major banks are preparing stablecoin initiatives, while groups including SBI Holdings are broadening crypto trading and custody services.
