Japan's Lower House Passes Crypto Bill: Bitcoin, Ethereum and XRP Could Shift to 20% Tax Regime

Japan's Lower House has approved legislation that would reclassify cryptocurrencies including Bitcoin, Ethereum and XRP as financial products, placing them under the same regulatory umbrella as stocks and other securities. The bill amends the Financial Instruments and Exchange Act. If the Upper House also passes the measure, Japan would move away from treating crypto mainly as a payment tool and instead recognize digital assets as financial instruments, a shift designed to provide clearer rules and stronger investor protections while making it easier for traditional financial institutions to offer crypto-related services. The proposal also tightens conduct standards. It would ban insider trading that relies on nonpublic information, require crypto firms to publish annual transparency reports, and substantially increase penalties for violations. The maximum prison term for operating an unlicensed crypto exchange would rise to 10 years from 3 years. Taxation is a central part of the reform package. Crypto gains in Japan can currently face tax rates as high as 55%. The new framework would replace that structure with a flat capital gains rate of about 20% nationwide, aligning crypto taxation more closely with stocks and bonds. The reclassification could also pave the way for regulated crypto exchange-traded funds. Industry reports indicate Japan Exchange Group expects crypto-tracking ETFs could begin appearing as early as next year, with wider adoption targeted by 2027. Bitcoin was trading around $63,000, up 3.3% over the past 24 hours.