Japan Passes Bill Redefining Crypto Assets as Financial Products, Imposes Insider Trading Rules

Japan's House of Councillors passed a bill on July 15 to amend the Financial Instruments and Exchange Act and the Payment Services Act, redefining crypto assets as financial products. According to Foresight News, the bill renames crypto asset exchange operators to crypto asset trading operators, raises the maximum prison term for unregistered sales from 3 years to 10 years and fines from 3 million yen to 10 million yen, and introduces insider trading regulations that prohibit trading based on undisclosed material information. Certain crypto asset issuers must now make annual periodic disclosures. On taxation, the bill switches from comprehensive taxation (up to 55%) to separate self-assessment taxation (approximately 20%), allowing losses to be carried forward for 3 years, with the new tax regime scheduled to take effect on January 1, 2028. The proposed amendments also establish a framework to support the creation of cryptocurrency ETFs.