Author: CryptoSlate
Compiled by Deep潮 TechFlow
Deep潮 Overview: Japan’s House of Councillors has passed a cryptocurrency regulatory reform bill, bringing crypto trading under the Financial Instruments and Exchange Act and ultimately implementing a 20% tax rate. However, when this long-awaited preferential tax rate will take effect depends on when the Cabinet initiates the new rules—implementation in 2027 would mean taxation begins in 2028, and the timeline remains uncertain.
On July 15, Japan's House of Councillors approved Cabinet Bill No. 57 by majority vote, completing the legislative process to bring regulated crypto activities under the Financial Instruments and Exchange Act.
The legal framework is in place, but traders may still need to wait until 2027 or 2028 for the new market rules and the 20% tax rate to take effect.
Official Senate records indicate that the core crypto provisions will take effect on a date set by Cabinet order within one year of the law's publication. If implemented in 2026, the tax rules will take effect on January 1, 2027; if implemented in 2027, the effective date will be delayed to January 1, 2028. The Cabinet’s schedule will determine which calendar applies.
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This reform shifts the regulation of cryptocurrency transactions from the Payment Services Act to the Financial Instruments and Exchange Act. While cryptocurrencies remain legally distinct from securities, regulated activities are now subject to a compliance framework similar to that of securities markets.
The Financial Services Agency's guidance materials have added disclosure and registration requirements for crypto sales, issuer-controlled token issuances, and lending, as well as asset screening, custody, customer protection, and insider trading controls.
Exchanges and intermediaries can now prepare for this framework; their obligations will apply upon its effective date. Detailed operational requirements are yet to be established by cabinet order and Financial Services Agency regulations.
XRP currently dominates cash inflows in Japan, and a new 20% tax is set to solidify this advantage.
Congress has passed legislation regarding taxation, but its cryptocurrency provisions remain dormant until they meet the triggering conditions under the Financial Instruments and Exchange Act. Japan enacted and published the 2026 fiscal year tax amendment, known as Law No. 12, on March 31. Upon effectiveness, qualifying gains will be subject to a comprehensive tax rate of 20%, comprising 15% national income tax and 5% local resident tax.
The 20% tax rate applies only to investors who sell eligible tokens through a registered crypto business, and the assets are listed on Japan’s official registry.
Unused losses within the same tax-defined cryptocurrency category may be carried forward for three years, subject to certain conditions. Tokens, venues, and transactions outside this definition remain subject to existing treatment.
The reporting comes into effect one year after the tax and loss rules take effect. Under the Ministry of Finance framework, businesses must provide customer identities, Japan’s My Number identifiers, and transaction details to tax authorities by January 31 of the year following the transaction. If the 20% rule begins in 2028, reporting will cover transactions from 2029, with the first reports due on January 31, 2030.
Japan’s 20% crypto tax rate has set a new benchmark in Asia, putting pressure on Singapore and Hong Kong as retail costs decline.
The reform plan also outlines potential pathways for crypto investment products. It brings crypto investment management and advisory services under the Financial Instruments and Exchange Act, and anticipates that certain investment trusts will hold registered crypto assets qualifying for tax treatment. This approach requires a separate amendment to the Enforcement Order of the Investment Trust Act.
The text does not mention spot Bitcoin ETFs, nor does it grant approval for any product. In October 2025, the Financial Services Agency stated that, under the previous framework, the establishment and sale of domestic crypto ETFs were prohibited. Sponsors must still undergo applicable product and listing reviews after implementing rules to define a new path.
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The key dates depend on when the law is officially enacted, when the Cabinet implements the amendments to the Financial Instruments and Exchange Act, and when the Financial Services Agency finalizes the detailed regulations. The 20% tax rate will apply starting from the next tax year.