The Japanese Parliament has passed historic amendments to the Financial Instruments and Exchange Act, officially moving cryptocurrency regulation into the sphere of investment legislation. The main provisions will come into force within a year after official publication, while all technical details will be determined by separate cabinet orders and supervisory instructions. Previously, the primary legal regime considered digital assets mainly as a simple means of payment. Now, the law classifies them into a separate, clearly defined category of financial instruments, which is distinct from traditional securities. At the same time, stablecoins will continue to be considered electronic payment instruments, maintaining their special status in the country's financial system. Polls show that already sixty-five percent of Japanese institutional investors use Bitcoin to diversify their portfolios, highlighting the high relevance and timeliness of adopting these new rules for the rapidly growing digital asset market.

The new rules radically change trading conditions in the domestic market, making it more transparent and safe for all participants. The amendments introduce a special ban on transactions using material non-public information, which will apply to all assets admitted to trading on registered Japanese crypto platforms. Insiders may now include employees of issuers, trading platforms, and other market participants who have access to closed information about listings, trading suspensions, project changes, and large deals. Companies issuing cryptocurrencies will have to provide data before placement, publish information on material events, and issue annual reports. For assets without a specific issuer, including Bitcoin, registered trading platforms will handle information disclosure. The law also significantly increases liability for unregistered work: the maximum prison sentence will increase from three to ten years, and the upper limit of the fine will increase from three million to ten million yen.

Tax changes are provided for by a separate reform and are not directly included in the adopted amendments to the law. The proposed model involves separate taxation at a fixed rate of twenty point three one five percent with the ability to carry forward losses for the next three years. The new regime is planned to apply only to certain crypto assets traded through operators registered in Japan, while income from staking, lending, and operations with non-fungible tokens will continue to be taxed as miscellaneous income under the current progressive scale starting from January first, twenty twenty-eight. Transferring crypto assets under the Financial Instruments and Exchange Act also creates a legal architecture for the emergence of spot exchange-traded funds, the first listings of which traditional financial organizations plan for twenty twenty-seven. However, the adoption of amendments does not mean automatic approval of funds based on Bitcoin or other cryptocurrencies, as their launch will require additional regulations, regulator decisions, and listing rules. Recall that in March, the Bank of Japan began experiments with blockchain technology, launching a regulatory sandbox to test settlements using distributed ledgers.