Japan Parliament Reclassifies Cryptocurrency as Financial Asset and Raises Penalties for Unregistered Operators

Japan's parliament passed an amendment on July 15, 2026, that reclassifies cryptocurrency as a financial asset under the Financial Instruments and Exchange Act. ZeroHedge reported, citing NHK, that the measure moves digital assets out of the Payment Services Act and subjects them to the same rules that govern stocks, bonds, and investment trusts.

The legislation, first approved by the cabinet in April 2026, takes effect within a year and targets full implementation in fiscal 2027.

It places crypto under insider-trading prohibitions that restrict issuers, exchange operators, and others with non-public information from trading ahead of token listings, delistings, or major technical incidents. Exchanges must now publish details on each token's issuer, blockchain design, and volatility profile, while regulators receive expanded market-surveillance powers.

Penalties for unregistered operators increase sharply.

The maximum prison term rises from three years to 10 years, and the top fine climbs from 3 million yen to 10 million yen, or about $62,000. Lawmakers also approved a separate plan, tied to the 2026 Tax Reform Outline, that cuts the top tax rate on crypto gains from 55 percent to a flat 20 percent beginning in 2028.

The reclassification removes a prior barrier that had prevented Japanese asset managers from offering regulated bitcoin exchange-traded funds.

User accounts on domestic exchanges have grown steadily, and the reforms align crypto with Japan's broader capital-markets framework.