FX.co ★ Japan's parliament officially recognizes cryptocurrency as financial asset

The Japanese parliament has passed a significant law amendment reclassifying cryptocurrencies from payment methods under the Payment Services Act to full-fledged financial assets under the strict Financial Instruments and Exchange Act. The changes set to take effect within a year will require platforms to rebrand as “cryptocurrency trading companies” and enforce stringent regulations, including a ban on insider trading.

This reform sharply increases penalties for unregistered activities, raising the maximum prison term from three to ten years and the fine to 10 million yen. At the same time, it introduces a substantial financial incentive. The new designation will facilitate a reduction in taxes on crypto income from a progressive rate of 55% to a fixed 20% by 2028 (on par with stock income), thereby establishing a legal framework for launching spot cryptocurrency ETFs.

These developments come amid a significant influx of retail investors, with the local regulator stating that the goal of these changes is not to restrict the industry but to create a safe and transparent ecosystem. Major Japanese financial institutions are already beginning to prepare their infrastructure for integrating digital assets into traditional client portfolios.