Japan’s parliament has taken a major step toward regulating cryptocurrencies as financial instruments, akin to stocks. The bill passed the lower house and is expected to be enacted next year. This move could lower the tax burden for crypto investors from rates as high as 55% to approximately 20%, aligning it with stock taxation. It may also pave the way for regulated products like spot crypto exchange-traded funds, while introducing stricter market oversight.
Japan’s parliament is advancing legislation to regulate cryptocurrencies under the same framework as stocks. The bill passed the lower house and is expected to take effect next year after approval by the upper house. This would classify assets like Bitcoin and Ethereum as financial instruments.
The reform could significantly reduce the tax burden for investors. Crypto gains, previously taxed as miscellaneous income at rates up to 55%, may instead be taxed closer to 20%, the rate applied to stock profits. This change aims to make the local market more attractive.
The legislation could also open the door for new regulated products. Bloomberg reported that the bill may help pave the way for spot crypto exchange-traded funds. These ETFs would offer a regulated method for gaining crypto exposure without direct ownership.
Masato Yoshizawa, a representative for the Financial Services Agency, commented on the regulatory goals. “We aim to foster more innovation by creating a sound trading environment. We’re not necessarily giving crypto a stamp of approval, but we’re aiming for healthy market growth.”
The proposal also focuses on increasing oversight and investor protection. Bringing crypto under stock rules prepares stricter guardrails for trading activity, including controls on insider trading and stronger disclosure requirements. This aligns digital assets more closely with Japan’s existing financial market structure.
The final implementation hinges on the upper house passing the bill. Regulatory details will be defined before the expected enactment next year.
