Catenaa, Thursday, June 11, 2026— Japan’s lower house has advanced legislation that would reclassify cryptocurrencies as financial instruments, bringing the country a step closer to placing digital assets under a regulatory framework similar to stocks while potentially cutting taxes on crypto gains and expanding institutional participation in the sector.
The bill cleared the House of Representatives’ Finance and Financial Affairs Committee on June 10 after being submitted by the cabinet in April. It now moves to the upper house, the House of Councillors, for further consideration.
If approved, the legislation is expected to take effect next year and would mark one of the most important changes to Japan’s cryptocurrency regulatory framework since the country first introduced exchange licensing requirements.
The proposal would move crypto assets into the category of financial instruments, subjecting them to rules that currently govern securities markets. Regulators would gain broader oversight powers, while trading activities could face tighter compliance requirements.
The move reflects a growing view among policymakers that cryptocurrencies have evolved beyond their original role as alternative payment systems and now function as investment products for retail and institutional investors alike.
One of the most closely watched aspects of the proposal is its potential impact on taxation.
Under the current framework, crypto profits can be taxed at rates reaching 55% depending on income levels. Reclassification could allow digital asset gains to be taxed at a flat 20% rate, aligning them with stocks and bonds.
Such a change would make Japan significantly more competitive in attracting crypto investment and could encourage domestic participation in digital asset markets.
Industry participants have long argued that Japan’s existing tax structure places crypto investors at a disadvantage compared with investors in traditional financial assets.
The legislative progress comes as Japan’s digital asset sector gains momentum, particularly in stablecoins.
The country established a legal framework for stablecoins in 2023 through amendments to the Payment Services Act, introducing the concept of electronic payment instruments. The framework allows registered entities and banks to issue and manage stablecoins under regulatory supervision.
That policy foundation has already produced tangible developments.
Fintech company JPYC launched what it described as Japan’s first legally recognized yen-denominated stablecoin in late 2025. Earlier this year, SBI Holdings and Startale Group introduced JPYSC, a trust bank-backed stablecoin designed for institutional and cross-border transactions.
Meanwhile, Japan’s largest banking groups are preparing for broader adoption. MUFG Bank, Mizuho Bank and SMBC have announced plans to begin live commercial transactions using a jointly issued stablecoin before the end of the fiscal year ending March 2027.
The proposed reclassification could further accelerate institutional involvement in Japan’s crypto market.
Traditional financial institutions generally prefer operating within familiar securities-style regulatory environments. Bringing crypto under a framework similar to stocks may reduce regulatory uncertainty and support broader product development.
The proposal also aligns with a broader global trend. Policymakers in major financial centers increasingly view digital assets as investment products requiring oversight similar to traditional capital markets.
Japan has often positioned itself as an early mover in cryptocurrency regulation. Following the collapse of the Mt. Gox exchange in 2014, the country became one of the first major economies to introduce a formal licensing system for crypto exchanges.
The legislation signals Japan’s intention to integrate digital assets more deeply into its financial system rather than restrict their use.
A successful passage in the upper house would likely strengthen confidence among institutional investors while creating a clearer regulatory pathway for exchanges, asset managers, banks and stablecoin issuers.
Lower tax rates could also encourage more domestic capital to remain within Japan’s regulated crypto ecosystem instead of flowing to offshore platforms.
Japan’s latest legislative push represents another milestone in the country’s evolving approach to digital assets. By treating cryptocurrencies more like traditional financial instruments, policymakers are seeking to balance investor protection with industry growth while strengthening the country’s position as a leading regulated crypto market in Asia.
Japan has played a central role in the global development of cryptocurrency regulation for more than a decade. The collapse of the Mt. Gox exchange in Tokyo in 2014 exposed weaknesses in early crypto oversight and prompted authorities to develop one of the world’s first comprehensive licensing systems for exchanges. Over the following years, the Financial Services Agency tightened custody, cybersecurity and compliance requirements while maintaining a relatively open stance toward innovation. In 2023, Japan became one of the first major economies to establish a dedicated legal framework for stablecoins. More recently, policymakers have explored blockchain-based finance, tokenized assets and digital payments as part of broader efforts to modernize the country’s financial sector. The current proposal to classify cryptocurrencies as financial instruments is widely viewed as the next stage in that regulatory evolution.
