Japan’s Cabinet Approved a Crypto Reclassification Bill in April
On April 10, 2026, Japan’s Cabinet approved a bill that changes how the country treats cryptocurrency under the law.
On April 10, 2026, Japan officially changed how cryptocurrency is legally classified under national law.
Before this bill, crypto was grouped under the Payment Services Act, like digital cash. Now it moves under the Financial Instruments and Exchange Act, alongside stocks and bonds.
Think of it like moving crypto from the “spending money” drawer to the “serious investments” drawer.
This shift means crypto must follow stricter financial rules. Japan hopes this change will make digital asset markets fairer and more trustworthy for everyday investors and big financial players alike. The bill also introduces insider trading prohibitions, applying penalties for trading on non-public information similarly to how they are enforced in traditional financial markets. Japan is also exploring reducing the crypto income tax rate to 20%, aligning it with what investors already pay on stocks.
Regulators say the change will allow for stronger surveillance programs to detect suspicious trading and protect retail investors.
Japan Is Moving Crypto From the Payments Act to Financial Instruments Law
Japan is making a big change to how it thinks about cryptocurrency.
Before, crypto was treated like a payment method — similar to a gift card or digital cash. Now Japan wants to treat it more like stocks and bonds.
This means crypto will move from the Payment Services Act to the Financial Instruments and Exchange Act. Think of it like transferring a student from art class to business class — same school but very different rules.
The Financial Services Agency pushed for this shift because crypto has grown beyond simple payments into something people actively invest in.
This reclassification is expected to open the door to regulated crypto ETFs in Japan for the first time.
Registered operators will also be reclassified from “crypto asset exchange business” to “crypto asset trading business”.
New Insider Trading and Disclosure Rules for Japan’s Crypto Market
With this reclassification comes a whole new set of rules about fairness. Japan now prohibits trading on secret information in crypto markets. Think of it like knowing the answers before a test — it is simply not allowed. Insiders who learn about upcoming token listings or protocol upgrades must keep quiet and stay out of the market. Companies must also publish annual financial reports for 105 listed tokens including Bitcoin and Ethereum. The Securities and Exchange Surveillance Commission will enforce these rules strictly. Firms must create blackout periods and insider lists just like traditional stock market companies already do. Higher fines will also be imposed on unregistered crypto exchanges that attempt to operate outside the bounds of the updated legal framework. Exchanges are also tasked with compiling disclosure data for each listed asset, ensuring that standardized information about underlying blockchain technology and volatility profiles is available to investors for informed decision-making. This shift aims to improve settlement times and operational efficiency for market participants.
Unregistered Crypto Operators Now Face Up to 10 Years in Prison
Running an unregistered crypto business in Japan just got a lot riskier. The government has sharply increased penalties for operators selling crypto without proper registration.
Think of it like selling lemonade without a permit, except the stakes are much higher. Prison sentences can now reach 10 years up from just 3 years before.
Fines jumped from 3 million yen to 10 million yen. That is more than a threefold increase across the board.
Operators can face both imprisonment and fines together. Japan is clearly sending a strong message that cutting corners in crypto will carry serious consequences.
This crackdown is part of a broader plan to move cryptocurrency regulation from the Payment Services Act to the Financial Instruments and Exchange Act. Under the new framework, insider trading is explicitly banned for the first time, closing a significant gap that existed under the previous payment services rules.
When Japan’s Crypto Reclassification Rules Take Effect
After the cabinet signed off on the bill on April 10, 2026, the clock started ticking. But the rules do not kick in immediately.
The cabinet approved the bill on April 10, 2026, but the real countdown had only just begun.
First, lawmakers in Japan’s Diet must vote to pass the bill. If they approve it, the new framework officially launches in fiscal year 2027.
Think of it like a school project with a deadline one year away. That gap gives crypto exchanges time to prepare.
They must reorganize under a new “crypto asset trading business” label and get their systems ready. Nobody gets surprised by sudden changes. Everyone gets a fair runway to comply. Insider trading based on undisclosed information will also be strictly prohibited under the new rules.
Major firms like Nomura Holdings and SBI Holdings are expected to develop crypto-linked ETFs, with a legalization and launch timeline targeted for 2028.
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