Japan's Lower House Passes Crypto Bill Opening ETF and Tax Reform Path

Japan's Lower House reportedly passed a bill on June 11, 2026 that would move crypto assets under the country's Financial Instruments and Exchange Act (FIEA), the same regulatory framework governing stocks and bonds. Bloomberg reported the development Thursday, citing legislative records showing the bill cleared the Committee on Financial Affairs on June 10. The legislation now heads to the Upper House before becoming law, with a projected effective date of 2027 and the tax changes expected in 2028.

From Payments Act to Financial Instruments Framework

Currently, crypto assets in Japan are regulated primarily under the Payment Services Act — a framework designed for payment instruments, not investment products. The proposed shift to the FIEA would treat crypto as a financial product subject to stricter trading rules, disclosure requirements, insider trading restrictions, and tighter exchange oversight.

Japan's Financial Services Agency (FSA) flagged this regulatory shift in April 2026 materials, noting the proposal would create separate crypto-asset transaction rules while applying investment-style governance. The FSA said issuers of certain assets would face disclosure requirements during offerings and secondary distributions — mirroring how securities issuances are handled under existing law.

Capital Gains Tax: From 55% Maximum to 20% Flat

The most immediately impactful provision for Japanese retail and institutional investors is the proposed tax change. Capital gains on crypto are currently taxed as miscellaneous income, with a maximum marginal rate of 55% — the same rate that applies to other high-income miscellaneous earnings. The proposed FIEA classification would align crypto with stocks and bonds, applying a flat 20% capital gains rate. The change is expected to take effect in 2028.

The tax gap — 55% versus 20% — has been cited as a persistent deterrent to domestic crypto investment in Japan. Large gains realized on major crypto positions effectively face the same tax treatment as high-income salary, discouraging long-term holding and driving some Japanese investors toward offshore platforms with different tax treatment.

Path to Domestic Crypto ETFs

The FIEA classification could also open the door to crypto-tracking ETFs in Japan. Currently, Japanese regulators have not approved domestic crypto ETFs, leaving investors limited to crypto exchanges or listed companies with significant token holdings. Reclassifying crypto as a financial instrument brings it within the regulatory perimeter where ETFs are permitted, according to Bloomberg's reporting on the bill.

Japan already hosts SBI Holdings, one of Ripple's largest strategic partners. SBI has been expanding crypto product offerings to retail customers, including XRP-linked vouchers through SBI Shinsei Bank and broader blockchain remittance infrastructure. A domestic ETF framework could provide SBI and other Japanese institutions a regulated route to offer crypto exposure at scale within the country's financial advisory distribution channels.

Relevance for the XRPL Ecosystem

Japan has historically been one of the most active markets for XRP. SBI Ripple Asia and SBI Holdings have maintained long-running partnerships with Ripple, building remittance infrastructure and retail product integrations over several years. A regulatory framework that increases domestic institutional participation in crypto — and reduces the tax friction on gains — expands the addressable market for XRP-denominated financial products in one of the world's largest retail investment markets.

The bill's passage also signals a broader trend: major economies are moving crypto from payment-focused oversight to financial-market oversight. The US, UK, EU, and now Japan are each converging on frameworks that treat digital assets as regulated financial products rather than novelty payment instruments. For institutional builders, that convergence means clearer legal footing for cross-border product deployment.