Japan Crypto Bill Passes Lower House, Paves Way for ETFs, Tax Cut

Japan’s lower house passed a bill Thursday that would reclassify cryptocurrencies as securities, cut capital gains taxes on crypto profits to a flat 20%, and clear a regulatory path for Bitcoin and Ether exchange-traded funds. The legislation now moves to the upper chamber for final debate. Political observers expect the framework to become operational next year after approval.

The bill amends the Financial Instruments and Exchange Act. Cryptocurrencies, currently treated as payment-related assets, would fall under the same oversight as equities. That change gives trading platforms and fund managers legal authority to offer crypto-linked investment vehicles. Japan Exchange Group anticipates the first domestic Bitcoin ETFs could list on its venues as early as next year, giving investors exposure through standard brokerage accounts instead of relying on corporate proxies.

Metaplanet holds more than 40,000 Bitcoin. With ETF products entering the market, the company would face direct competition. Analysts said Metaplanet would need to justify its treasury strategy, custody arrangements, and valuation disclosures with more transparency than it does today.

The tax reform is the other headline shift. Japan’s current system pushes some crypto gains to marginal rates near 55%. The new bill flattens that to a uniform 20%, matching the treatment of stocks and bonds. The lower rate could take effect in 2028, while the securities classification provisions may activate sooner. Traders who have avoided frequent transactions because of the high tax burden may find the new rate more attractive.

Insider trading enforcement gets a significant upgrade. Unauthorized crypto operators face prison sentences of up to 10 years under the new rules, up from three years under existing law. Insider trading penalties would mirror those for public securities violations. That could strengthen confidence in licensed platforms but raise legal and auditing costs for smaller exchanges, several analysts noted.

Japan listed 27 licensed crypto exchange operators as of April 1. Established platforms like bitFlyer and Coincheck are better positioned to absorb the new compliance requirements. Smaller operators may face consolidation pressure or exit the market entirely, analysts said.

Stablecoins remain outside this bill’s scope. They keep their status under payment service regulations. Japan authorized its first yen-denominated stablecoin, JPYC, in autumn 2025, and major banks have launched their own stablecoin initiatives with regulatory backing. The bill targets the volatile asset class, not the payment-token ecosystem.

The legislation still needs upper house approval. The lower house vote signals broad political support, and the new framework would give Japan one of the more coherent crypto securities regimes among major economies.