Japan's National Diet approved on July 15 the reclassification of bitcoin and roughly 105 other crypto assets from the Payment Services Act into the Financial Instruments and Exchange Act, removing a central legal obstacle to listing a spot bitcoin exchange-traded fund on the Tokyo Stock Exchange. The move aims to open the country's digital asset market to institutional and retail investors through regulated brokerage platforms. Japan's Financial Services Agency is now weighing custody standards and implementation of new crypto taxation rules, with a possible ETF launch in 2028 — though legal amendments, individual fund reviews, and tax policy execution could delay trading beyond that date. The regulatory shift reflects Japan's effort to treat crypto as a standard financial instrument while maintaining strict oversight shaped by past failures including Mt. Gox and the Coincheck breach.
Japan's Diet Moves Bitcoin Under Securities Law on July 15
The July 15 approval by Japan's National Diet transferred bitcoin and roughly 105 other crypto assets out of the Payment Services Act and into the Financial Instruments and Exchange Act. This reclassification places digital assets under the same legal framework as conventional securities, introducing stricter disclosure, trading, and market-conduct standards. The change removed the primary regulatory barrier preventing a spot bitcoin ETF from listing on the Tokyo Stock Exchange.
SBI Holdings and Nomura Prepare Digital Asset Products
SBI Holdings and Nomura are among the large Japanese financial groups reportedly preparing digital asset products ahead of any rule change. Their interest suggests firms expect demand to rise once bitcoin exposure becomes available through familiar brokerage platforms. A spot bitcoin ETF would allow banks, fund managers, retirement investors, and brokerage customers to gain exposure without managing private keys or opening crypto exchange accounts.
Japan Reduces Crypto Tax from 55% to Flat 20%
Japan recently moved from a punitive miscellaneous income tax of up to 55% to a flat 20% separate taxation regime for cryptocurrencies. This tax reform represents a major step toward treating crypto as a standard financial instrument. The 20% rate aligns digital assets more closely with taxation of conventional securities and could determine whether local ETFs gain traction among retail and institutional investors.
Custody Standards Shaped by Mt. Gox and Coincheck Failures
Japan's cautious regulatory stance reflects its history of major crypto failures, including Mt. Gox and the Coincheck breach. Regulators are likely to demand strict standards for custody, pricing, liquidity, and investor protection before approving any spot bitcoin ETF. The country also faces pressure to keep pace with competing financial centers: the United States approved spot bitcoin ETFs in 2024, while Hong Kong has allowed spot bitcoin and ether funds.
FAQ
What did Japan's National Diet approve on July 15?
Japan's National Diet approved on July 15 the reclassification of bitcoin and roughly 105 other crypto assets from the Payment Services Act into the Financial Instruments and Exchange Act, removing a central legal obstacle to listing a spot bitcoin ETF on the Tokyo Stock Exchange.
Why did Japan reduce the crypto tax rate to 20%?
Japan reduced the crypto tax rate from a miscellaneous income tax of up to 55% to a flat 20% separate taxation regime to treat digital assets as standard financial instruments and encourage adoption of regulated crypto products such as spot bitcoin ETFs.
