Japan Passes Bill To Crackdown On Crypto Insider Trading, Reduce Tax To 20%

Japan has given its approval to a new reform of its digital currency laws as lawmakers enacted digital assets into the country’s financial markets regulatory system. The reform will implement stricter requirements for the industry such as a prohibition on insider trading and a tax cut for crypto. Moreover, it increases the possibility for Bitcoin, crypto ETFs to be launched in the future.

Japan Advances Major Crypto Bill Reform

The law classifies cryptocurrencies more as an investment product than a payment product and places them under the Financial Instruments and Exchange Act (FIEA). The Japanese crypto bill was passed by the lower house in mid-June following approval of the proposal by the Cabinet on April 10, 2026. It will go through the upper house and be expected to complete the remaining legislative process in 2027.

The new framework will apply securities-like regulations to about 105 digital assets. Periodic disclosures will have to be made by the token issuers and there will be increased compliance requirements throughout the market. Authorities have also tightened up on explicit bans on insider trading in crypto assets.

Penalties for dealing unlawfully with the market have been raised to higher levels. Violations will be punished by an increase in max prison time from three years to 10 years. Fines will also be raised, up to 10 million yen from 3 million yen.

The reforms also include changes to crypto taxation. At this moment, digital asset trading profits are considered miscellaneous income and tax rates can reach as high as 55%. The government has proposed to replace the current tax system with a new flat tax at rate of 20% for individual investors. If approved by law, the tax changes will go into effect in 2028.

Bitcoin ETF Approval Soon?

Previously, Finance Minister Satsuki Katayama has stated that the reforms will enhance investor protection and facilitate capital formation, while keeping financial markets fair.

According to the new classification, the regulation of Bitcoin and crypto ETFs in Japan should become easier as well. The revised framework may facilitate the approval of products like Yen denominated Bitcoins ETF in the future. There are already over 12 million verified crypto users in Japan with approximately $34 billion in crypto assets held under domestic custody.

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