Japan puts regulated crypto under FIEA; 20% tax may start 2028

Japan’s upper house approved Cabinet Bill 57 on July 15, shifting regulation of certain crypto transactions from the Payment Services Act to the Financial Instruments and Exchange Act (FIEA). The Diet completed passage of the law, but detailed implementing orders and Financial Services Agency (FSA) ordinances are still required before firms face the new duties.

The FIEA provisions will take effect on a date set by Cabinet order within one year of promulgation. If the Cabinet brings the FIEA changes into force during 2026, the tax rules would start on Jan. 1, 2027. If enforcement occurs during 2027, the 20% tax rate would instead begin on Jan. 1, 2028. The Cabinet’s timing therefore determines which tax year applies.

Tax amendments were enacted as part of Japan’s fiscal 2026 changes and promulgated as Law No. 12 on March 31, 2026. Once active, qualifying crypto gains will be taxed at a combined rate of 20% — 15% national income tax and 5% local inhabitant tax. The reduced rate applies only when investors sell eligible tokens through registered crypto businesses and when the assets are recorded on Japan’s official crypto register. Tokens, venues and transactions outside those conditions will keep their existing tax treatment.

The tax rules include loss-offset provisions: unused losses within the same tax-defined crypto category may be carried forward for three years under specified conditions. Reporting obligations follow the tax rules by one year. Under the Finance Ministry framework, businesses will be required to submit customer identities, Japan’s My Number identifiers and transaction details to tax authorities by Jan. 31 after the trade year. If the FIEA-triggered regime begins in 2028, reporting would cover trades from 2029 with the first filings due Jan. 31, 2030.

Under the new framework, crypto will remain legally distinct from securities, but activities that meet FIEA coverage will face duties similar to those in securities markets. FSA materials describe requirements including disclosure and registration for crypto sales, issuer-controlled token offerings and borrowing, asset screening and custody standards, customer protections and insider-trading controls. Exchanges and intermediaries can prepare now, but statutory duties will bind firms only after the Cabinet and FSA issue the implementing orders and ordinances that set operational details.

The package creates a route for regulated crypto investment products by bringing crypto investment management and advice under FIEA and by allowing certain investment trusts to hold tax-qualifying, registered crypto assets. That treatment requires a separate amendment to the Investment Trusts Act enforcement order before such funds can be launched under the new tax regime. The law does not name a spot Bitcoin ETF or grant product approvals; sponsors must clear product and listing reviews once implementing rules define the process.

Key next steps are the Cabinet’s decision on when to bring the FIEA provisions into force, formal enactment dates, and completion of FSA ordinances and guidance. Only after those steps are taken will the 20% tax rate and the securities-market-style compliance regime apply from the subsequent tax year.