Catenaa, Monday, September 21, 2026- Japan has enacted legislation moving cryptocurrency trading regulation from the Payment Services Act to the Financial Instruments and Exchange Act as the country shifts its treatment of digital assets toward an investment-focused framework.
The National Diet completed passage of the amendments July 15.
Under the revised framework, crypto assets will be treated as financial instruments distinct from securities such as stocks and bonds.
The law introduces new disclosure requirements for crypto issuers and exchanges and strengthens rules governing market misconduct.
Japan will also introduce dedicated insider-trading restrictions covering crypto assets traded by registered domestic operators.
The rules prohibit people with access to material nonpublic information involving issuers, exchanges or major token transactions from trading before that information becomes public.
Penalties for operating an unregistered crypto trading business will also increase sharply.
The maximum prison term rises from three years to 10 years, while regulators gain stronger investigative and enforcement powers.
The framework also places crypto investment management and investment advisory activities under FIEA regulation.
Japan had historically regulated cryptocurrencies primarily as payment instruments following major exchange failures, including the collapse of Mt. Gox and later security breaches.
The latest reforms reflect the growing use of bitcoin and other cryptocurrencies as investments rather than primarily as payment tools.
Tax treatment is changing alongside the regulatory structure.
Crypto gains are currently generally treated as miscellaneous income, with combined national and local tax rates for high earners reaching about 55%.
Japan’s 2026 tax reform provides for qualifying crypto gains to move to separate taxation at 20.315%, broadly matching the treatment of listed securities.
The new rate is expected from January 1, 2028, and will apply only to eligible crypto assets and transactions conducted through regulated operators.
The changes also create a path toward domestic crypto exchange-traded funds.
The Financial Services Agency has said Japan needs to consider regulatory changes that would permit investment trusts and ETFs to hold crypto assets directly.
No domestic spot bitcoin or ether ETF has yet been approved for listing on the Tokyo Stock Exchange.
Japan’s move comes as US lawmakers continue debating their own digital asset market structure.
The US Senate failed September 15 to advance the CLARITY Act after a 49-50 procedural vote.
Japan, meanwhile, has already enacted its new statutory framework, although much of the operating detail will depend on Cabinet orders and Financial Services Agency rules before the main provisions take effect.
