Japan to Regulate Crypto Like Stocks, Could Pave Way for ETFs

Japan is moving to regulate cryptocurrencies like stocks, with lower taxes, stricter trading rules, and possible ETF listings on the horizon.

The country’s parliament is poised to pass legislation that would bring cryptocurrencies under the same regulatory framework as stocks.

The bill passed the lower house of Parliament today and is expected to take effect next year after going through the upper house.

The proposal could classify cryptocurrencies as financial instruments, subjecting assets such as Bitcoin and Ethereum to stricter trading rules while potentially lowering the tax burden for investors.

It’s important to note that Japan’s government had already approved a bill that granted crypto status of financial instruments, marking an attempt to bring digital assets closer to securities for oversight purposes.

Lower Taxes and ETF Hopes Take Center Stage

One of the most closely watched parts of this particular legislative reform is taxation. Crypto gains in Japan have historically been taxed as miscellaneous income, with rates that can climb as high as 55%. Under the proposed framework, gains could be taxed closer to 20%, which is the rate applied to stocks.

That change would make the local crypto market much more attractive to retail and institutional investors, especially compared to the current system, which industry participants have long criticized as a bit too restrictive.

The move could also open the door for new regulated products, such as spot crypto exchange-traded funds. Bloomberg reported that the bill may help pave the way for ETFs, which give investors a fully regulated way to gain exposure to cryptocurrencies like Bitcoin without having to hold them directly.

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Commenting on the matter was Masato Yoshizawa, a representative for the Financial Services Agency, who said:

“We aim to foster more innovation by creating a sound trading environment. We’re not necessarily giving crypto a stamp of approval, but we’re aiming for healthy market growth.”

Japan Also Pushes for More Oversight

But the proposed legislation is not only focused on growth. By bringing cryptocurrencies under the rules that regulate stocks, Japan is also preparing stricter guardrails for trading activity. This means more control over insider trading, stronger disclosure requirements, and more restrictions altogether.

Naturally, this would align crypto much more closely with Japan’s existing financial market structure, where investor protection and market transparency are central in legislation.

That said, the next step is whether the upper house passes the bill and how regulations define all the details before the expected implementation next year.