Japan's lower house of parliament has passed a landmark bill shifting cryptocurrency regulation from the Payment Services Act to the Financial Instruments and Exchange Act, effectively treating digital assets like stocks and other investment products. The new rules, expected to take effect in 2027, classify crypto assets as financial instruments, subjecting them to lower taxes and stricter trading rules. Key provisions include insider trading bans mirroring stock market rules, tougher disclosure requirements for token issuers, and investment caps of 2 million yen for unaudited token offerings. The maximum penalty for operating an unregistered crypto business will increase from three to ten years in prison, with fines up to 10 million yen. The move also opens the door to crypto exchange-traded funds (ETFs). The Financial Services Agency cited the rapid growth of crypto investment, with over 14 million open accounts, of which 70% belong to individuals earning under 7 million yen annually, as driving the regulatory shift. The bill aims to balance user protection with innovation, responding to increasing domestic and international demand for digital asset services.

Key facts

• Bill reclassifies crypto as financial instruments under the Financial Instruments and Exchange Act.
• Insider trading bans and stricter disclosure rules mirror stock market regulations.
• Investment cap of 2 million yen for unaudited token offerings.
• Maximum prison sentence for unregistered crypto businesses rises from 3 to 10 years.
• New rules open the door to crypto ETFs and lower taxes.