- Japan's lower house has advanced legislation that would classify crypto as financial instruments.
- The proposal would place digital assets under rules similar to stocks and bonds.
- Investors could benefit from a reduced tax rate, potentially dropping from up to 55% to a flat 20%.
- The bill now moves to Japan's upper house for final approval.
Major Regulatory Shift For Crypto
Japan is moving closer to one of its most significant crypto regulatory reforms to date after lawmakers advanced legislation that would classify cryptocurrencies as financial instruments.
The bill received approval from the House of Representatives' Finance and Financial Affairs Committee on June 10 and now heads to the House of Councillors, Japan's upper legislative chamber.
If approved, the legislation is expected to take effect sometime next year.
The proposal marks a major shift in how Japan regulates digital assets. Currently, cryptocurrencies are primarily governed under the Payment Services Act, where they are treated largely as payment instruments rather than investment assets.
Tax Benefits Could Follow
One of the most closely watched aspects of the proposal is taxation.
Under the current framework, crypto gains can face tax rates as high as 55% depending on income levels. Reclassifying crypto as financial instruments could allow gains to be taxed similarly to stocks and bonds, which generally face a flat 20% tax rate.
Such a change would make Japan considerably more attractive for both retail and institutional crypto investors.
The move would also bring stricter trading regulations and enhanced market oversight, aligning crypto markets more closely with traditional financial markets.
Stablecoin Adoption Accelerates
The legislative progress comes as Japan continues to emerge as one of the world's most active jurisdictions for digital asset innovation.
Since introducing a clear stablecoin framework in 2023, the country has seen a growing number of projects enter the market.
JPYC launched the country's first legally recognized yen-denominated stablecoin in late 2025. Earlier this year, SBI Holdings and Startale Group introduced JPYSC, a trust-backed stablecoin aimed at institutional and cross-border transactions.
Meanwhile, Japan's three largest banks, MUFG, Mizuho, and SMBC, recently announced plans to launch commercial transactions using a jointly issued stablecoin before March 2027.
SBI Shinsei Bank has also revealed plans to offer crypto rewards programs for depositors later this year.
Institutional Adoption Continues To Grow
The proposed legislation highlights Japan's broader effort to integrate digital assets into its existing financial system while maintaining strong regulatory oversight.
By treating crypto as a financial instrument rather than simply a payment method, regulators appear to be laying the foundation for deeper institutional participation, clearer investment frameworks, and potentially more competitive tax treatment for investors.
If approved by the upper house, the law could become one of the most important crypto regulatory developments in Asia during 2027.
