Japan Cuts Its 55% Crypto Tax to 20% and Reclassifies Digital Assets

Japan reclassifies crypto as a regulated financial product

Japan's parliament passed amendments to the Financial Instruments and Exchange Act (FIEA) that reclassify cryptocurrencies as financial products. The House of Councillors approved the measure in a plenary session on Wednesday. The change moves digital assets such as Bitcoin and Ethereum out of the Payment Services Act, which since 2017 had treated them mainly as payment methods. It places them in the same legal category as stocks, bonds and investment trusts. The reform is the broadest change to Japan's crypto rules since the 2017 framework took effect.

The reform ends years of high crypto tax rates

For years Japan applied one of the heaviest crypto tax regimes among major economies. Gains were treated as miscellaneous income and taxed at progressive rates reaching about 55%. Retail investors faced marginal rates far above those charged on equities. Industry groups had long argued that the burden pushed traders and startups abroad. The new law answers that pressure by aligning crypto with the tax treatment of listed shares.

The top crypto tax rate falls to 20 percent

Under the new framework, crypto gains face a flat 20% rate, matching the tax on stock-market profits. The bill also lets investors carry losses forward across three years, a benefit already available to securities traders. The flat tax is scheduled to take effect in 2028. The reclassification itself is expected to apply from fiscal 2027, about a year after enactment.

Unregistered operators now face harsher penalties

The amendments tighten the rules for market participants. Unregistered operators now face up to 10 years in prison, up from three years. Maximum fines rise from 3 million yen to 10 million yen, or roughly $18,500 to $61,600. The bill also introduces insider-trading prohibitions for crypto and requires token issuers to file annual disclosures. These provisions mirror the reporting duties long imposed on listed companies.

Bitcoin traded near $64,600 at publication

Bitcoin traded at $64,618 at the time of publication, up about 3% over the past 24 hours (CoinPaprika, 15 July 2026). Its market value stood near $1.30 trillion, roughly 49% below the record high it set in October 2025. Bitcoin's 24-hour trading volume reached about $26.7 billion (CoinPaprika, 15 July 2026). The reclassification applies to major tokens including Bitcoin, Ethereum and XRP, which now sit under Japan's securities framework.

The changes lay groundwork for Japanese crypto ETFs

The new status also lays the groundwork for crypto exchange-traded funds (ETFs). The Japan Exchange Group plans to target its first crypto ETF listings as early as 2027. The Tokyo Stock Exchange expects crypto ETF trading to begin as soon as that year. Domestic approval of a spot Bitcoin ETF has not yet been confirmed. The reform still marks Japan's clearest move yet to fold crypto into mainstream finance.