Japan’s cabinet approved a bill on April 10, 2026, to reclassify crypto assets as financial instruments under the Financial Instruments and Exchange Act, moving them out of the Payment Services Act for the first time. The decision signals a formal end to treating digital assets purely as a means of payment. It brings them into the same legal framework used for stocks, bonds, and derivatives.
The bill bans insider trading based on non-public information. Crypto issuers will now be required to file annual disclosures, a requirement previously absent under the PSA framework. Prison terms for operating without registration jump from 3 years to 10 years, and fines increase from 3 million yen to 10 million yen.
Katayama Ties Bill to Capital Markets Overhaul
Finance Minister Satsuki Katayama stated the bill would “expand the supply of growth capital in response to changes in Japan’s financial and capital markets, while also ensuring fairness, transparency, and investor protection.” The minister spoke at a press conference immediately after the cabinet meeting Friday morning. She called for prompt deliberation in the current Diet session.
The bill also covers disclosure of corporate sustainability information, funding rules for startup companies, and a review of regulations on unfair securities trading. Those elements sit alongside the crypto provisions in a single legislative package, something no top outlet reported in full.
Japan’s crypto regulation overhaul does not exist in isolation. Katayama noted at the same press conference that a G7 finance ministers meeting is scheduled for April 15, convened by France. The meeting will address global market volatility driven by the Iran conflict and the Strait of Hormuz disruption. Japan has already set aside approximately 800 billion yen in reserve funds to cover energy subsidy costs, with total funds exceeding 1 trillion yen. Attracting foreign institutional capital into Japanese markets, including digital assets, now carries clear fiscal logic for Tokyo.
What Changes for Crypto Operators
Exchange operators get a new designation under the bill. They will be renamed “crypto asset trading operators.” That renaming places them formally in the category of licensed financial instruments businesses, not payment service companies. Meeting Type 1 Financial Instruments Business standards requires more capital, independent auditors, and enhanced internal reporting systems.
The reclassification is expected to open the door to new financial products linked to crypto, including potential spot Bitcoin ETFs. Japan currently lists 105 cryptocurrencies on licensed trading platforms, including Bitcoin and Ether. All 105 fall under the new disclosure requirements if the bill passes. Japan’s Financial Services Agency previously regulated the sector under payment law after the 2014 Mt. Gox collapse wiped out 850,000 BTC, and again tightened rules after the DMM Bitcoin breach of $305 million in May 2024.
Diet Vote and Timeline
If the Diet passes the bill in the current session, enforcement begins in fiscal year 2027. No vote date has been confirmed. The FSA submitted the amendment as part of the cabinet-approved package; it now moves to parliamentary deliberation.
Tax reform on crypto gains, which has been discussed separately and would reduce rates from as high as 55 percent to a flat 20 percent, was not included in this bill. That measure remains part of a broader tax reform cycle. The Finance Minister’s office confirmed the FY2027 budget review process began the same morning, with approximately 37,000 public proposals already received during the review period that ran through February 2026.
Japan’s move positions its crypto asset rules closer to the EU’s MiCA framework and aligns with the direction set by the US SEC-CFTC coordination announced in March 2026.
