Japan's Upper House Passes Crypto Bill Overhauling Digital Asset Regulation

Japan's legislature approved a bill that reclassifies cryptocurrencies as financial products subject to securities law. The amendment to the Financial Instruments and Exchange Act and the Payment Services Act introduces insider‑trading bans, mandatory annual disclosures for issuers and raises penalties for unregistered operators, increasing maximum prison terms to ten years and fines to ¥10 million. The framework also creates a legal basis for cryptocurrency exchange‑traded funds and proposes a new tax regime that would levy roughly 20% on crypto transactions, replacing the current rates that can exceed 50%, with implementation expected from fiscal 2027.

The regulatory shift is prompting banks to reassess their crypto strategies. Traditional banks view the tighter oversight as a way to protect deposit bases from competition by stablecoins and other blockchain‑based money. They are exploring tokenized‑deposit solutions that blend blockchain programmability with regulated bank liabilities, while also monitoring U.S. legislative moves that could restrict stablecoin interest payments. The combined developments signal a move toward integrating digital assets within established financial systems rather than creating parallel crypto‑only markets.