Japan's House of Councillors Passes Amendment Reclassifying Crypto as Financial Product, Sets 20% Tax Rate

According to CoinPost, Japan's House of Councillors passed a partial amendment to the Financial Instruments and Exchange Act on July 15, reclassifying crypto assets from payment instruments to financial products. The amendment introduces several key changes: crypto asset exchanges must now be registered as crypto asset dealers; penalties for unlicensed operations increase from up to 3 years imprisonment and 3 million yen to up to 10 years and 10 million yen; insider trading rules for crypto are implemented for the first time; and issuers of specified crypto assets must disclose information annually.

On taxation, the amendment shifts from progressive income tax rates of up to 55% to a flat 20% separate filing tax rate, while allowing three-year loss carryforwards. These tax changes are set to take effect January 1, 2028. Additionally, the amendment establishes a framework for crypto asset ETFs, with Japan Exchange Group expected to launch its first ETF around 2027.