Japan Passes Bill Classifying Crypto as Financial Product, Paving Way for Spot ETFs

Japan has given final approval to an amendment to the Financial Instruments and Exchange Act that classifies crypto assets, or cryptocurrencies, as financial products rather than payment instruments.

CoinPost reported on July 15 that Japan’s House of Councillors approved the bill at a plenary session. The measure transfers crypto regulation from the Payment Services Act to the Financial Instruments and Exchange Act framework.

The centerpiece of the amendment is the formal designation of crypto assets as financial products for the first time. It also changes the name used for crypto businesses and strengthens penalties for operating without registration.

The amendment also establishes an institutional foundation for spot crypto exchange-traded funds in Japan. Japan Exchange Group is reviewing whether to list spot ETFs tied to crypto assets around 2027. On July 10, Japanese Finance Minister Satsuki Katayama said Japan would push ahead with a review aimed at permitting crypto ETFs domestically.

Japan is also pursuing tax changes for crypto income. The amendment would replace the current comprehensive tax regime, which can reach 55%, with a separate self-reported tax of about 20%, while allowing losses to be carried forward for three years. The tax overhaul would take effect after the Financial Instruments and Exchange Act is implemented. If the law takes effect in 2027, the new tax system would begin in 2028.