Japan's House of Representatives passed a bill on June 11, 2026 reclassifying crypto assets as financial instruments under the Financial Instruments and Exchange Act (FIEA), moving them out of the Payment Services Act framework that has governed them since 2017. The legislation, approved by Cabin...
"Under the leadership of the new foundation, ETH has the potential to become the settlement layer for the AI era." — Tom Lee, Fundstrat Global Advisors, keynote at WebX 2026, Tokyo, July 13, 2026
Japan's House of Representatives passed a bill on June 11, 2026 reclassifying crypto assets as financial instruments under the Financial Instruments and Exchange Act (FIEA), moving them out of the Payment Services Act framework that has governed them since 2017. The legislation, approved by Cabinet on April 10, now awaits upper house passage before becoming law with implementation expected in 2027.
The reclassification carries a flat 20% capital gains tax rate — down from the current progressive structure that peaks at 55% — and introduces a three-year loss carryforward provision. It also creates a legal pathway for crypto exchange-traded funds (ETFs) in Japan, a product currently unavailable to the country's estimated 12.4 million retail crypto holders sitting on approximately ¥4.26 trillion (~$27.5 billion) in assets under custody, according to data published by the Japan Virtual and Crypto-assets Exchange Association (JVCEA).
Prime Minister Sanae Takaichi reinforced the policy direction on July 13, 2026 in a video address to the WebX 2026 conference in Tokyo, reaffirming the government's ¥10 trillion annual startup investment target by fiscal 2027 and its goal of producing 100 unicorn companies. The speech marked the third consecutive year a sitting Japanese prime minister has addressed WebX, following Fumio Kishida in 2024 and Shigeru Ishiba in 2025 — a pattern that signals Web3 has become embedded in Japan's bipartisan economic agenda rather than treated as a niche technology issue.
The core legislative change moves crypto assets from the Payment Services Act (PSA) — where they have been regulated alongside prepaid cards and remittance services — into the Financial Instruments and Exchange Act, Japan's primary securities law.
Under the new framework:
The bill passed the House of Representatives on June 11, 2026. It must clear the House of Councillors (upper house) before it becomes law. New FIEA rules are expected to take effect in 2027 if the upper house approves.
Under the current system, crypto profits are classified as "miscellaneous income" and taxed at progressive rates that range from 15% to 55% (including the 10% local inhabitants tax). This structure has been widely cited as a barrier to retail participation and a primary reason capital and talent migrated to jurisdictions such as Singapore, Dubai, and Hong Kong.
The FIEA bill introduces a flat 20.315% capital gains rate for "specified crypto assets" — approximately 105 tokens listed on FSA-approved exchanges including bitFlyer, Coincheck, and GMO Coin. This aligns crypto's tax treatment with equities and foreign exchange gains.
Key provisions:
| Feature | Current Regime | Post-FIEA | |---------|---------------|-----------| | Tax classification | Miscellaneous income | Separate taxation (capital gains) | | Maximum rate | 55% | 20.315% | | Loss carryforward | Not available | 3-year carryforward | | Loss offset | Same category only | Offset against other specified crypto gains | | Filing | Annual return required | Annual return required |
Effective date: Tax changes are expected to take effect January 1, 2027 or January 1, 2028, depending on the legislative session in which the bill receives final approval.
The reform is not comprehensive. Several categories of crypto activity remain outside the 20% rate:
This creates a two-tier system: a "green zone" of regulated, tax-advantaged spot trading, derivatives, and ETFs on registered exchanges, and a "gray zone" where staking, DeFi, and NFTs remain subject to the old progressive structure.
The FIEA reclassification opens the door for crypto ETFs in Japan — a product that does not currently exist in the domestic market. While no specific ETF applications have been publicly filed as of July 14, 2026, the legal framework is now in place pending upper house approval.
Context matters: the United States approved spot Bitcoin ETFs in January 2024 and spot Ethereum ETFs in May 2024. Hong Kong approved spot Bitcoin and Ethereum ETFs in April 2024. Japan would be the third major market to permit regulated crypto ETFs, though it could leapfrog peers by allowing a broader range of assets — the FIEA framework covers all "specified crypto assets," not just Bitcoin and Ethereum.
Japan's 12.4 million retail crypto holders and $27.5 billion in assets under custody represent a significant addressable market for ETF issuers. Given the tax advantage — ETF gains would qualify for the 20% rate — demand could shift from direct exchange trading to wrapped ETF products.
The legislative reforms coincide with an aggressive acquisition and investment campaign by SBI Holdings, Japan's largest online financial conglomerate, which has deployed over $800 million in crypto-related deals in 2026 alone:
According to The Block, SBI's strategy is to build "Asia's first at-scale onchain asset management business" by combining Gauntlet's institutional on-chain capabilities with the distribution it would control through Bitbank and Coinhako. The pivot to Solana — through the SBI Solana Global joint venture with the Solana Foundation — positions SBI to serve as both an exchange operator and an infrastructure provider.
PM Takaichi's July 13 video address at WebX 2026 — attended by approximately 15,000 participants from over 90 countries — linked Web3 to Japan's broader startup investment program. Key commitments:
The continuity of prime ministerial engagement — three consecutive years of PM addresses at WebX — contrasts with the inconsistent political attention crypto receives in other major economies. Takaichi presented Web3 as part of Japan's wider innovation strategy rather than a standalone crypto policy.
Separately, the Ripple-backed Web3 Salon, in partnership with the Japan External Trade Organization (JETRO), is offering grants of up to $200,000 to Japanese teams building on the XRP Ledger, focused on payments, tokenization, and DeFi.
Japan's reforms position it differently from its regional competitors:
| Jurisdiction | Crypto Tax Rate | ETF Status | Stablecoin Regime | Retail Access | |-------------|----------------|------------|-------------------|---------------| | Japan (post-reform) | 20% flat | Pathway created | PSA-regulated, bank-issuable | Full, 30+ exchanges | | Singapore | 0% (no capital gains tax) | Not permitted | MAS-regulated, licensed issuers | Restricted retail marketing | | Hong Kong | 0% (no capital gains tax) | Spot BTC/ETH approved (2024) | Stablecoin Ordinance (Aug 2025) | Retail via licensed platforms | | South Korea | 20% (effective 2026) | Not permitted | Bills competing | Full via licensed exchanges |
Japan cannot match Singapore or Hong Kong on headline tax rates, but it offers something neither does: a regulated ETF pathway combined with unrestricted retail access and a 12-million-user domestic market. Singapore bans retail crypto advertising; Hong Kong imposes suitability checks. Japan's approach is to tax at a competitive rate and regulate through the existing securities framework.
The structural question is whether Japan's ¥4.26 trillion in retail crypto custody — currently parked on exchanges — will flow into ETF products, creating the kind of institutional demand pipeline that the U.S. spot Bitcoin ETFs generated after approval.
Japan's crypto infrastructure is among the most mature in Asia:
The exchange market is expected to grow from $3.66 billion in 2025 to $28.07 billion by 2034, at a 25.4% CAGR, according to IMARC Group estimates.
Japan's FIEA bill represents the most comprehensive crypto regulatory overhaul in any G7 economy. The reclassification from payment service to financial instrument, combined with the tax cut and ETF pathway, addresses the three structural complaints that have limited Japan's crypto market despite its large retail base: punitive taxation, regulatory ambiguity, and lack of institutional products.
The bill's exclusions — staking, DeFi, NFTs, and foreign exchange trades remain in the old regime — create a deliberate two-tier system that rewards regulated, domestic activity over permissionless or offshore participation. Whether that design choice attracts capital or pushes DeFi-native users toward unregistered platforms is the open question.
SBI Holdings' $800 million deployment suggests institutional actors are not waiting for the upper house vote. The combination of regulatory clarity, a ¥120 trillion annual trading market, and 12.4 million retail accounts makes Japan a market where the policy framework and the capital deployment are moving in the same direction — a condition that has not existed simultaneously in this jurisdiction since the Mt. Gox collapse in 2014.