TOKYO, April 10, 2026 – In a landmark regulatory shift, Japan's cabinet has approved legislation to formally classify cryptocurrencies as 'financial products,' granting them the same legal status as traditional securities while slashing the crippling tax rate on profits from 55% to a flat 20%. The amendments to the Financial Instruments and Exchange Act, approved today, mark the most significant pro-crypto pivot by a major economy, extending stringent insider trading prohibitions and annual disclosure mandates to digital asset markets in a decisive move to protect investors and legitimize the sector.
Satsuki Katayama, Japan’s Finance Minister, emphasized that the country will boost the supply of growth capital to counter the effects of ever-evolving financial and capital markets. The bill, which reclassifies nearly 105 crypto assets, is also set to ensure markets remain fair and transparent, protecting investors.
Meanwhile, investor protection will include increasing the prison sentence from 3 years to up to 10 years to strengthen penalties. More stringent penalties, such as raising fines from the current 3 million yen to up to 10 million yen, further demonstrate Japan’s strong commitment to protecting investors.
“We will expand the supply of growth capital in response to changes in financial and capital markets, and ensure fairness and transparency in the market and investor protection.”
–Satsuki Katayama, Finance Minister of Japan
To achieve these objectives, the Financial Services Agency (FSA), which previously regulated crypto under the Payment Services Act, will shift regulation to the Financial Instruments and Exchange Act. Registered businesses will also be collectively renamed from the previous “crypto asset exchange businesses” to “crypto asset trading businesses.”
The FSA is shifting its crypto policy by submitting an amendment to the Financial Instruments and Exchange Act, allowing local banks and other institutions to hold crypto for investment purposes. The move will effectively integrate crypto into the country’s financial system.
Japan was already the first major economy to regulate crypto post-Mt. Gox, and this move takes it a step further. The bill will shift the legal framing of crypto assets from digital payment tools to investible financial instruments.
Meanwhile, the use of crypto assets for investment purposes has increased in Japan, representing a significant strengthening of regulations. The country’s over 12 million verified crypto users and $34 billion in assets under local custody now have a real runway to grow with these institutional-grade rules in place.
On the other hand, Japan signaled in January that it was bringing crypto under the same umbrella as traditional finance, when Katayama said that the role of exchanges and market infrastructure will be essential to ensure that citizens benefit from crypto assets. The country also plans to legalize crypto ETFs by 2028, marking a significant shift toward mainstream crypto adoption.
Local media reported that major financial groups in Japan, including SBI Holdings and Nomura Holdings, are among the first companies to develop crypto-linked exchange-traded products (ETPs).
The country is moving crypto out of the experimental payments category and into the same league as its stock market by reclassifying crypto assets, marking a major step toward domestic mainstream institutional adoption.
Additionally, Katayama highlights 2026 as a pivotal year for bringing crypto under traditional financial regulation. She adds that the framework under the proposed bill prioritizes the use of Japan’s established digital asset infrastructure. The bill fits into a wider overhaul, according to the Japanese finance minister.
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