Japan’s cabinet has approved changes 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 as stocks and bonds, reflecting their growing role as assets.
The measure is part of Japan’s efforts to streamline its financial system to align with changing capital markets, with new regulations related to crypto asset management, financial disclosure, and business protection. These changes are also designed to help ensure market transparency and increase capital for startups and growing economies.
The bill also introduces restrictions on insider trading, mandatory annual disclosures for issuers, and stricter measures, including heavy penalties for non-registered issuers.
If passed in the current Diet session, these changes are expected to take effect in 2027.
Japanese investors will hold about 5 trillion yen, roughly $33 billion, in crypto assets by the end of 2025.
The country, however, has seen an increase in federal and tax-friendly spending over the years. Singapore, Dubai, and Hong Kong have all positioned themselves as crypto-friendly destinations.
Japan is set to change its crypto tax system instead of its progressive regime, where profits were taxed at a rate of up to 55%, with 20% at a lower rate under a separate self-assessment tax.
