Japan Reclassifies Crypto as Securities, Slashing Bitcoin Tax to 20%

Crypto News

Japan is preparing to reclassify cryptocurrencies including Bitcoin (BTC) as financial products, folding digital assets into the Financial Instruments and Exchange Act (FIEA) and clearing a path to a flat 20% tax. An amendment bill was cleared for passage in the upper house on July 15, shifting crypto out of the payments-focused regime that has governed it and placing it alongside stocks and bonds under securities-grade oversight. For individuals, the headline change is tax: the current top rate of 55% under comprehensive taxation moves to a separate 20% self-assessment regime, with losses carried forward for three years. Enforcement is slated for fiscal 2027, meaning the new tax treatment would likely apply from 2028.

In a parallel push, SBI Global Asset Management is tokenizing a Japanese equity fund on a blockchain so overseas institutions can trade it around the clock — a structure billed as a world first for Japanese stocks. The firm is setting up a private fund in Singapore and issuing tokenized units through DigiFT, a licensed digital-securities exchange; capital raised flows back into a domestic mother fund that buys the underlying shares. The target vehicle, an SBI high-dividend equity fund, holds positions in blue chips such as SoftBank Group and Mitsubishi UFJ Financial Group. Tokenization removes the timezone and account-opening barriers that long deterred foreign investors from Japanese equities.

Japan's three largest banking groups — Sumitomo Mitsui, Mizuho and Mitsubishi UFJ — are moving to form a joint council to explore a shared stablecoin, according to executives at a Tokyo industry conference. All three back a dual-track strategy pairing stablecoins with tokenized deposits, arguing users will pick each tool by use case rather than one winning outright. Unlike algorithmic stablecoins that lean on code-based pegs, the bank tokens would be fully deposit-backed. The flagged use case is corporate cash management: multinationals stranding funds across timezones could pool liquidity in real time, 24/7, over a single rail rather than juggling three separate bank-issued coins.

A separate conference panel spotlighted tokenizing Japanese government bonds (JGBs) to sharpen collateral efficiency across the financial system. When institutions swap collateral today, they must post the new asset before withdrawing the old, forcing them to temporarily hold double — up to ¥20 billion to rotate a ¥10 billion position. Settling both legs simultaneously on-chain, delivery-versus-payment, could shrink that “excess collateral,” the same posted-asset primitive that underpins DeFi lending venues like Aave. Executives from Mitsubishi UFJ Trust, SMBC Nikko and JPX argued the real saving is not operational cost but asset cost, freeing idle bonds for higher-yielding deployment and reshaping bank balance-sheet management.

The reclassification also imports securities-grade market rules into crypto for the first time. Insider-trading restrictions will apply, barring insiders at issuers and exchanges from trading on undisclosed material facts and criminalizing tipping and trade recommendations. Penalties for operating without registration jump from three years to ten. Issuers of tokens with an identifiable sponsor must publish disclosures at offering; Bitcoin, which has no issuer unlike many altcoins, is exempt, though domestic exchanges listing it still carry the disclosure duty. Crypto asset management and investment advice both fall under FIEA business licensing. The lower house cleared the package on June 11, setting up the final upper-house vote.

SBI is pressing its digital-asset expansion on multiple fronts beyond fund tokenization. In early July the group joined the $76 million funding round for EDX Markets, a US institutional crypto exchange, as lead investor. It formed a joint venture, SBI Onchain, with DigiFT in November 2025, and is building tokenized-stock and real-world-asset (RWA) infrastructure through a partnership with Startale Group. SBI Global Asset Management says money market funds and yen-denominated bond funds are next in line for tokenization. Rivals including Mitsubishi UFJ-affiliated firms are advancing their own tokenized products, but SBI is leading with a clear overseas-institutional angle that peers have yet to match.

Read together, these moves sketch Japan wiring traditional finance onto public and permissioned ledgers at once — the tax and securities overhaul, tokenized equities and JGBs, and a bank-consortium stablecoin all point to institutional on-chain rails rather than retail speculation. The reclassification bill advancing through the Diet is the primary catalyst, and the enabling groundwork traces to the 2023 revised Payment Services Act. Our aggregate market data frames the caution: Bitcoin dominance sits at 69.6%, the Fear & Greed Index reads 25 (Extreme Fear), and total crypto market capitalization is near $1.86 trillion — well off any all-time high. Japan is legislating infrastructure while global sentiment stays defensive.