Japan’s government has approved a bill to amend the Financial Instruments and Exchange Act, significantly overhauling cryptocurrency regulation. The new rules will treat crypto assets as financial instruments, shifting oversight and imposing stricter penalties for insider trading and unregistered sales. The legislation also cuts the crypto tax rate from 55% to 20%, aiming to protect investors while fostering market growth.
Japanese lawmakers are preparing substantial changes to the country’s cryptocurrency regulatory oversight. The government approved a bill to amend the Financial Instruments and Exchange Act, which will treat cryptocurrency assets closer to investments and financial instruments. This move transitions regulatory oversight from the Financial Services Agency (FSA) to the Financial Instruments and Exchange Act.
The legislation aims to curb insider trading while enforcing greater transparency for market participants. Traders will be prohibited from using non-public information, and crypto issuers must provide regular disclosures. Selling unregistered crypto assets could now lead to prison sentences of up to 10 years and fines up to $62,800, a sharp increase from the previous penalty of approximately $18,800.
Taxes on cryptocurrencies will see a massive reduction under the new framework. Japan’s crypto sector was previously among the highest taxed in the world at a rate of 55%. The new law will bring this tax burden down to a flat rate of 20%.
The overarching goal is to tighten oversight to protect Japanese investors while easing the tax burden to drive innovation. Finance Minister Satsuki Katayama stated, “We will expand the supply of growth capital in response to changes in financial and capital markets, and ensure fairness and transparency in the market and investor protection.” This regulatory overhaul comes at a time of bearish market forces, which may temper immediate investor response.
