Japan Advances Bill to Reclassify Crypto as Securities

Japan’s lower house advanced a cabinet bill on June 10 to reclassify cryptocurrencies as financial instruments. The measure, submitted by the cabinet in April, was advanced after a vote in the House of Representatives’ Finance and Financial Affairs Committee, parliament records show.

The legislation would place crypto assets under rules that apply to securities trading. Lawmakers expect the reclassification to take effect next year if the upper house, the House of Councillors, gives final approval. Under the proposed framework, crypto exchanges and related service providers would face trading rules, registration and disclosure requirements comparable to those applied to stock markets.

Currently, the Financial Services Agency regulates cryptocurrencies primarily under the Payment Services Act and treats them as a means of payment. Reclassifying crypto as financial instruments would broaden the FSA’s supervisory scope over firms dealing in tokens, custody services and trading platforms, and could require additional registration, disclosure and market conduct standards.

The bill would also change tax treatment of crypto gains. At present, Japan taxes some crypto income at rates that can reach 55%. If crypto is treated like stocks and bonds under the bill, capital gains would be taxed at a flat 20% rate, matching the tax applied to other financial instruments and altering how investors report gains.

The bill follows regulatory changes and commercial activity in Japan’s stablecoin market. Amendments to the Payment Services Act in 2023 introduced the category of “electronic payment instruments,” allowing registered service providers and banks to issue and manage yen-denominated stablecoins under supervision. In October 2025, JPYC Inc. launched a yen-denominated stablecoin described as legally recognized in Japan’s framework. In February, SBI Holdings and Startale Group introduced JPYSC, a trust bank-backed yen stablecoin targeting institutional and cross-border payments. MUFG Bank, Mizuho Bank and SMBC plan to begin live commercial transactions using a jointly issued stablecoin within the fiscal year ending March 2027. SBI Shinsei Bank plans to roll out a crypto rewards program for deposit customers later this year.

Supporters of the bill say the changes will create clearer rules for investors and businesses and align crypto with existing financial laws. Opponents have raised concerns about the operational impact on smaller crypto firms and the costs and timing of compliance with stricter trading rules and new registration requirements.

If the upper house approves the legislation, regulators will need to define specific licensing requirements and enforcement measures for the new classification. Firms active in crypto issuance, trading and custody will be required to adapt systems, disclosures and operations to meet standards applied to conventional financial instruments.