Japan’s Landmark Vote Reclassifies Bitcoin And Crypto As Financial Assets

JAPAN, 23 JULY 2026 —

Japan’s parliament passed legislation on Wednesday reclassifying bitcoin and other cryptocurrencies as financial assets under the Financial Instruments and Exchange Act (FIEA).

The amendment strips crypto of its prior status as a settlement instrument under the Payment Services Act and folds it into the same framework that governs stocks, bonds, and investment trusts, according to public broadcaster NHK. The change takes effect within a year, with enforcement targeted to start in the fiscal year ending March 2027.

Japan’s cabinet approved the draft amendment in April 2026, but Wednesday’s vote marked the final enactment into law. Lawmakers also formally approved a separate plan to cut the top tax rate on crypto gains from 55% to a flat 20% starting in 2028.

As financial instruments, the assets now fall under insider-trading rules that bar issuers, exchange operators, and other insiders from trading ahead of token listings, delistings, or major technical incidents. Exchanges must disclose issuer details, blockchain design, and volatility profiles, a standard that mirrors the reporting demands placed on securities firms. Regulators also gain broader market-surveillance authority over the sector.

Penalties for unregistered crypto operators rise under the new law. The maximum prison term increases from three years to 10, while the top fine jumps from 3 million yen to 10 million yen, about $62,000. The tougher enforcement signals a move to treat crypto misconduct with the same severity as securities fraud.

The reclassification clears a path for spot bitcoin exchange-traded funds, since FIEA governs the products that funds can hold. It also paves the way for a tax overhaul, as Japan currently taxes crypto gains as miscellaneous income at rates that reach 55%, among the steepest in any major market. The reduction to a flat 20% level, tied to the 2026 Tax Reform Outline, activates in 2028.

The reforms arrive as Japan accelerates a broader Web3 push and regulators weigh reserve requirements for exchanges that resemble the buffers held by securities firms. Domestic exchanges have expanded user accounts, and local crypto firms are positioning for a wider base of retail investors. For an industry that has long viewed Japan as an early and cautious mover, the vote marks a decisive turn toward legitimacy.

Related: Japan