Japan’s House of Councillors passes an amendment to the Financial Instruments and Exchange Act: cryptocurrencies are officially classified as financial products

According to CoinPost, Japan’s Senate plenary session passed the “Act on Partial Amendments to the Financial Instruments and Exchange Act and the Act on Settlement of Funds,” and for the first time, cryptocurrencies were officially defined at the legal level as “financial products.” To strengthen investor protection, Japan has for the first time introduced insider-trading regulation in the cryptocurrency sector, prohibiting trading using material non-public information, and has granted investigation powers to the Financial Instruments and Exchange Monitoring Commission. At the same time, it has raised the maximum penalties for unlicensed operations to 10 years’ imprisonment or JPY 10 million. For issuers of “specified crypto assets,” mandatory annual information disclosure requirements have also been introduced.

In terms of tax reform, the bill would shift cryptocurrency gains from the current comprehensive taxation (maximum tax rate of 55%) to filed separate taxation (tax rate of about 20%), and supports 3-year loss carryforwards. The changes are expected to take effect from January 1, 2028. In addition, the proposed amendments would also establish a regulatory framework to support cryptocurrency ETFs.