Japan's Lower House passes crypto bill, clearing path to ETFs and lower taxes
In brief
- Japan's Lower House passed legislation regulating crypto under the Financial Instruments and Exchange Act.
- Crypto-tracking ETFs could become available, giving retail investors regulated digital asset exposure.
- Capital gains tax on crypto drops from 55% to 20% starting in 2028.
Regulatory shift toward mainstream treatment
The bill would move crypto assets closer to the regulatory treatment of stocks and bonds by subjecting them to stricter trading rules. This represents a departure from Japan's current framework, which treats crypto under the Payment Services Act. The new structure treats digital assets as financial products separate from securities while introducing disclosure rules, tighter exchange oversight, insider trading restrictions, and stronger penalties for unregistered operators.
Official records showed the bill had cleared the Committee on Financial Affairs on June 10. The move follows months of regulatory groundwork — in November 2025, the Financial Services Agency decided to apply the Financial Instruments and Exchange Act to crypto including Bitcoin, Ether and other tokens.
Tax reform and ETF implications
The most immediate incentive for investors comes from tax changes. The proposed changes could lower the capital gains tax on crypto assets from a current maximum of 55% to a 20% flat rate. The tax change is expected to take effect in 2028.
Perhaps more significantly, the shift could also open the door to crypto-tracking ETFs in Japan, giving local investors a regulated route to digital asset exposure beyond crypto exchanges and listed companies with token holdings. ETF approval would mark a turning point for retail participation in Japan's crypto market, removing friction that currently requires direct exchange accounts.
The framework also mandates greater transparency. The proposed framework would require crypto-asset transaction business operators to publish information on the assets they handle, strengthening consumer protection and market oversight.
Timeline and next steps
The legislation is expected to take effect next year after going through the Upper House. The tax benefits won't arrive immediately — the 20% flat rate kicks in during 2028, giving the FSA and market participants time to implement the broader regulatory infrastructure. This phased approach suggests Japan is moving deliberately, not rushing crypto integration.
