Japan’s cabinet approved on Friday, March 10, a bill amending the Financial Instruments and Exchange Act to classify crypto as “financial instruments,” shifting oversight from the Payment Services Act, and confirmed by Finance Minister Satsuki Katayama.
A Historic Day for Crypto
Japan’s government has approved an official bill reclassifying crypto from being defined only under the Payment Services Act (which is the method for regulating Payment Processing Services) to now falling under the Financial Instruments and Exchange Act (which is also the regulatory framework used to regulate stock exchanges and shares). This new law makes it very clear that these digital assets are treated as securities rather than payment methods.
What’s in The Legislation?
The new regulations establish prohibitions against using any unpublished information regarding any securities transaction to commit “insider trading.” Issuers will now be required, by law, to present an annual financial disclosure to their investors; non-compliance will result in monetary fines of up to ¥10,000,000 (around USD 62,800) or up to ten years imprisonment for failure to comply in accordance with section 796 (Companies Act) of the Financial Instruments & Exchange Act.
This new law will also reform the tax treatment of crypto; capital gains taxes will be lowered from 55% to 20%, the same as other types of equities. By 2028, the Japanese government will refine the framework regulating the use of digital assets and plans to issue guidelines to create crypto exchange-traded funds (ETFs) through participation by Nomura Holdings and SBI Holdings to build all types of crypto-related products. Implementation is expected as early as fiscal 2027, pending Diet passage.
