Japan’s Cabinet approves bill to regulate crypto as financial products

Japan’s Cabinet has approved amendments to the Financial Instruments and Exchange Act (FIEA) to treat cryptocurrencies as financial instruments, Finance Minister Satsuki Katayama said after a cabinet meeting on April 10.

Cryptocurrencies have so far been regulated under the Payment Services Act as a form of payment in Japan. The change will treat them like stocks and bonds, reflecting their growing role as investment assets.

The measure is part of Japan’s efforts to overhaul its financial regulatory framework to adapt to changing capital markets, with new legislation targeting crypto asset oversight, disclosure standards, and investor protection. The reforms are also designed to improve market transparency and channel more capital toward startups and economic growth.

The bill also introduces insider trading prohibitions, mandatory annual disclosures for issuers, and stricter enforcement measures, including higher penalties for unregistered operators.

If passed during the current Diet session, the reforms are expected to take effect in fiscal 2027.

Japanese investors held an estimated 5 trillion yen, roughly $33 billion, in crypto assets by the end of 2025.

The country, however, has watched capital flow to jurisdictions with friendlier tax treatment for years. Singapore, Dubai, and Hong Kong have all positioned themselves as crypto-friendly destinations.

Japan is set to transform its crypto tax system by replacing its punitive progressive regime, where gains were taxed as high as 55%, with a flat 20% rate under separate self-assessment taxation.