Japan Advances Bill to Reclassify Bitcoin and ETH Under Financial Instruments Law

Japan's House of Representatives advanced a bill on June 10 that would reclassify crypto assets as financial instruments. The legislation cleared the Finance and Financial Affairs Committee and now awaits a vote in the House of Councillors before it can take effect. The cabinet submitted the bill in April, and the bill is expected to take effect next year if the House of Councillors approves it. Under the proposed framework, crypto-asset transaction rules would move from the Payment Services Act to the Financial Instruments and Exchange Act, shifting oversight by Japan's Financial Services Agency. The proposed changes could lower capital gains tax on Bitcoin and Ethereum from a current maximum of 55% to a flat 20%, with that tax change expected to take effect in 2028.

Why it matters: A capital markets framework could improve regulated crypto access if Japan completes the legislative process.

Cautiously Bullish, Regulatory-driven.

Reason: The bill would move crypto assets into a capital markets framework if the upper house approves it.

The EU's MiCA adoption offers a close regulatory analogue. The Council of the EU adopted MiCA on May 16, 2023, creating a unified crypto-asset framework for issuers and service providers across the EU. (Council of the EU) The difference is that Japan's bill still needs upper house approval and includes a potential tax change tied to crypto investment treatment.

Reclassification could transmit through compliance and product access channels, because exchanges and issuers may need stronger disclosure controls before new products expand. If the House of Councillors approves the bill, then domestic venues may prioritize compliance systems and regulated product planning. If approval stalls, then market impact could remain mostly expectation-based.

Opportunities: If the House of Councillors approves the bill, then regulated product development becomes a potential entry signal for Japan-linked crypto exposure. When the 20% tax path becomes clearer, then investors can reassess whether domestic demand conditions improve.

Risks: If approval is delayed or implementation terms narrow the framework, then reducing exposure to Japan-specific regulatory optimism limits downside. If exchanges face higher compliance burdens, then waiting for venue readiness can reduce execution risk.