Japan's Upper House Approves Revised Financial Instruments Act; Crypto to Fall Under 20% Tax, ETF Ban Set to End
AI Market Summary
Japan's Senate passed amendments bringing crypto assets under the Financial Instruments and Exchange Act, adding insider-trading oversight and sharply higher penalties for unlicensed operators. The law also sets a roadmap to cut crypto trading profits tax to 20% from January 2028 and to permit crypto ETFs, potentially broadening institutional access. Although implementation is staged through 2027–2028, the direction signals a more investable and regulated market.
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Japan's House of Councillors on Thursday passed amendments to the Financial Instruments and Exchange Act, Japanese media reported.
The revision brings crypto assets (virtual currencies) into the country's financial instruments regulatory framework, moving beyond their previous treatment primarily under the Payment Services Act as a means of payment.
On market oversight and investor protection, the updated law introduces a crypto-specific insider trading monitoring regime under the Securities and Exchange Surveillance Commission. Penalties for operating without a license will be strengthened: the maximum prison term will rise from three years to 10 years, and the maximum fine will increase to 10 million yen.
The amended bill is expected to take effect by July 2027.
The changes also set out major shifts in taxation and investment access. From January 2028, profits from crypto asset trading will move from comprehensive taxation's current top marginal rate of 55% to a flat 20% rate, matching the separate taxation applied to stocks. Crypto asset ETFs are also expected to be formally allowed around the same time, with multiple securities firms already preparing to enter the market.
