Japan’s House of Councillors approved Cabinet Bill 57 by majority vote on July 15, finalizing legislation that relocates cryptocurrency regulation under the Financial Instruments and Exchange Act (FIEA). While the legal framework is established, traders may need to wait until 2027 or 2028 for full market rules and the proposed 20% tax rate to take effect.
The legislation specifies that core crypto provisions will commence within one year of promulgation via a Cabinet order. Depending on when enforcement begins—either during 2026 or 2027—the tax framework would apply starting January 1, 2027 or 2028, respectively. The Cabinet’s timing decision will determine the final implementation year.
Implementation Comes Before Immediate Benefits
The regulatory overhaul shifts cryptocurrency oversight from the Payment Services Act to FIEA. While crypto remains distinct from securities legally, regulated activities now operate under a securities-market-style compliance framework.
The Financial Services Agency’s guidelines introduce disclosure and registration requirements for crypto sales, issuer-controlled token offerings, borrowing activities, asset screening, custody protocols, customer protections, and insider-trading controls.
Exchanges and intermediaries can prepare for these obligations now, though detailed operational rules will be established via future Cabinet orders and FSA ordinances.
Parliament has already approved the tax framework as Law No. 12 on March 31, but its crypto provisions remain inactive until the FIEA provisions commence. Enacted gains would face a combined tax rate of 20%, split between 15% national income tax and 5% local inhabitant tax, applied only when investors liquidate qualifying tokens through registered entities and the assets are listed on Japan’s official register.
Unused losses within the same tax category can be carried forward for three years under specific conditions. Assets or transactions outside this defined channel retain existing treatment. Reporting obligations will follow one year after tax rules, requiring businesses to submit taxpayer details, Japan’s My Number identifiers, and transaction records by January 31 following the fiscal year. If the 20% regime launches in 2028, reports covering 2029 transactions would be due January 31, 2030.
The reform also outlines pathways for crypto investment products. It incorporates crypto asset management and advisory services under FIEA and envisions investment trusts holding tax-qualified, registered crypto assets, pending modifications to the Investment Trusts Act enforcement rules. The legislation does not authorize spot Bitcoin ETFs or approve specific products. The FSA previously barred domestic crypto ETFs under earlier frameworks, requiring sponsors to navigate additional product and listing approvals once operational rules are finalized.
