[Digital Today reporter Hyunwoo Choo] The Japanese government approved a bill to amend the Financial Instruments and Exchange Act that classifies cryptocurrencies as financial products. On April 10 local time, blockchain media outlet Cryptopolitan reported that Japan introduced a new tax system that changes taxation of cryptocurrency gains from a top 55 percent progressive rate to a single 20 percent rate.

The amendment focuses on treating cryptocurrencies as investable financial assets rather than a means of payment. As a result, insider-trading rules applied in the stock market will also apply to cryptocurrency trading. The aim is to prevent trading based on undisclosed material information.

Entities that issue cryptocurrencies will also be required to disclose information at least once a year. If the amendment passes during the current parliamentary session, it is expected to take effect in fiscal 2027.

Japan's finance minister Satsuki Katayama (사쓰키 가타야마) said the government will expand the supply of growth capital in response to changes in financial and capital markets, and strengthen market fairness and transparency as well as investor protection. The bill assumes the reclassification of about 105 cryptocurrencies.

Penalties will also increase. The maximum prison term will rise to 10 years from 3 years, and the maximum fine will increase to 10 million yen from 3 million yen.

The supervisory framework will also change. The Financial Services Agency plans to move cryptocurrency regulation from the Payment Services Act framework to the Financial Instruments and Exchange Act system. The name for registered operators will change from cryptocurrency asset exchange operators to cryptocurrency asset trading operators. It also plans institutional changes to allow Japanese financial institutions, including regional banks, to hold cryptocurrencies for investment purposes.

In January, Japan signalled a direction to place cryptocurrencies under the same regulatory framework as traditional finance. It is also pushing to legalise cryptocurrency exchange-traded funds by 2028. Japanese financial groups such as SBI Holdings and Nomura Holdings were mentioned as companies that have moved to develop crypto-linked exchange-traded products.