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Japan has approved one of the most significant overhauls of its digital asset framework since recognizing cryptocurrencies as legal property in 2017, voting 211-31 in favor of amendments to the Financial Instruments and Exchange Act (FIEA) and the Payment Services Act.
The reform moves cryptocurrencies from a payments-focused framework into Japan’s financial markets regime, placing Bitcoin (BTC), Ether (ETH), XRP (XRP), and more than 100 other listed digital assets under rules similar to those governing securities firms. The changes are expected to take effect during fiscal 2027, while a separate tax reform targeting a flat 20% rate on crypto gains is planned for 2028.
【祝】暗号資産の申告分離課税（税率20%）とETF解禁が決定しました
改正金融商品取引法が参院本会議で可決・成立しました
賛成：211票
反対：31票ビットコイン・暗号資産に投資している日本人の皆さん
これから投資を始める日本人の皆さん
本当におめでとうございます！🎉
ヽ(´∀｀)ノ pic.twitter.com/KSd7xRTESR— アンゴロウ@暗号資産 (@angorou7) July 15, 2026
Under Japan’s new law, “financial product” does not mean that Bitcoin or XRP becomes stocks or securities. Instead, it means crypto trading is regulated under Japan’s FIEA, the same legal framework that governs securities firms and financial markets.
The legislation creates a new legal category called “specified cryptoassets,” replacing the previous approach that primarily treated cryptocurrencies as payment instruments under the Payment Services Act.
Registered exchanges will now operate under Type I Financial Instruments Business rules, requiring stricter capital standards, customer asset segregation, transparent order execution, and stronger operational controls. The amendments also introduce explicit insider trading restrictions, making it illegal to trade cryptocurrencies using undisclosed material information.
Enforcement powers have also expanded. Operating an unlicensed crypto exchange can now carry prison sentences of up to 10 years, compared with three years under the previous framework.
The reforms stem from a broader review of Japan’s crypto regulations following years of market growth and institutional participation, marking the country’s shift toward treating digital assets as mainstream financial products rather than alternative payment methods.
The new framework raises the legal responsibilities of companies issuing crypto-related disclosures.
Issuers can now face no-fault civil liability for false or misleading disclosures, while company directors and auditors may be held liable under a reversed burden of proof standard. Instead of investors proving negligence, executives must demonstrate they acted with appropriate care.
The changes bring crypto disclosure standards closer to those applied across Japan’s traditional capital markets.
By aligning crypto regulation with existing financial laws, policymakers aim to strengthen investor protection while improving confidence among banks, brokers, and institutional investors considering digital asset products.
The regulatory overhaul also lays the foundation for products that were previously difficult to approve under Japan’s legal framework.
Market participants expect the clearer classification to support the eventual launch of spot crypto exchange-traded funds (ETFs), potentially beginning in 2027 if regulators finalize the remaining implementation rules.
Separately, Japan plans to reduce the tax burden on crypto investors from 2028 by replacing progressive rates of up to 55% with a tax rate of roughly 20%. Combined with the new financial product classification, the reforms are designed to make Japan a more competitive destination for institutional investment while encouraging greater participation from retail investors.
The legislation also represents Japan’s clearest signal yet that cryptocurrencies are becoming a permanent part of the country’s regulated financial system rather than a niche alternative asset class.
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