Japan Approves Historic Crypto Bill, Paving Way for ETFs and Tax Cuts

Japan’s lower house of parliament has approved groundbreaking legislation that fundamentally reshapes how digital assets are regulated in the country, marking a major milestone for one of the world’s most significant cryptocurrency markets.

The new bill transfers oversight of cryptocurrencies from the Payment Services Act into the Financial Instruments and Exchange Act (FIEA), effectively placing digital assets under the same regulatory umbrella as traditional stocks and securities. This structural transformation could unlock substantial benefits for Japanese crypto investors and institutions alike.

Most notably, the legislative shift opens the door to lower tax rates on crypto gains. Currently, Japanese traders face steep income tax rates on digital asset profits, significantly higher than the more favorable capital gains treatment applied to stock investments. By aligning crypto with equities regulation, lawmakers have created a pathway to reduce this tax burden, potentially spurring increased retail and institutional participation.

ETF approval within reach

The regulatory realignment also establishes the framework needed for cryptocurrency exchange-traded funds to launch in Japan. While spot crypto ETFs have gained traction in the United States and other markets, Japanese investors have lacked similar products. This bill removes key regulatory barriers that previously prevented such offerings from receiving approval.

Japan has long maintained a complex relationship with digital assets, implementing strict regulations following the infamous Mt. Gox collapse while simultaneously fostering innovation. This latest move signals confidence that crypto has matured sufficiently to warrant securities-level oversight rather than payment system rules.

The legislation still requires upper house approval before becoming law, though passage through the lower chamber represents the most significant hurdle cleared. Market observers expect the changes to position Japan as an increasingly competitive jurisdiction for crypto businesses and further legitimize digital assets in the eyes of mainstream investors.

Based on reporting by the original source.