Japan has reclassified cryptocurrencies as financial instruments, a change that paves the way for new taxes on digital assets and the launch of crypto exchange-traded funds (ETFs).
Legislation passed in Japan’s Parliament amends the “Financial Instruments and Exchange Act” to shift crypto’s classification from a payment tool to an investment.
The new classification of cryptocurrencies such as Bitcoin (BTC) and Ethereum (ETH) is expected to take effect at the start of 2027.
The new framework also opens up the crypto sector in Japan to the launch of spot Bitcoin ETFs, which are already widely available in the U.S.
In a statement, Japan’s Financial Services Agency said it is developing a regulatory framework for crypto ETFs.
The new legislation also raises the maximum prison term for unregistered crypto operators from three years to 10 years and increases the maximum fine to 10 million yen ($6.15 million U.S.).
Lawmakers also approved reducing the taxes levied on crypto from 55% to 20%, although the lower rate is not expected to take effect until 2028.
The 20% tax will be split between Japan’s national government and regional authorities at 15% and 5%, respectively.
Bitcoin is trading at $64,800 U.S. on July 15.
