Japan Shifts Crypto to FIEA, But 20% Tax Rate May Wait Until 2028

Woofun AI reports that Japan’s House of Councilors approved Cabinet Bill 57 on July 15, finalizing the legislative shift of regulated crypto activity from the Payment Services Act to the Financial Instruments and Exchange Act (FIEA). This Diet passage establishes a securities-market-style compliance framework for covered activities, although crypto remains legally distinct from traditional securities.

Woofun AI data shows that the fiscal 2026 tax amendments, promulgated as Law No. 12 on March 31, remain dormant until the FIEA trigger is satisfied. Once active, qualifying gains realized through registered crypto businesses for assets on Japan’s official register will face a combined 20% rate, comprising 15% national income tax and 5% local inhabitant tax. Unused losses within the same tax-defined crypto category can be carried forward for three years, subject to specific conditions, while transactions outside this defined channel retain their existing treatment.

Structurally, the reform package outlines a pathway for crypto investment products by bringing investment management and advice under FIEA oversight. This anticipates certain investment trusts holding tax-qualifying, registered crypto assets, though such treatment requires a separate amendment to the Investment Trusts Act enforcement order. The Financial Services Agency (FSA) must finalize these ordinances alongside Cabinet orders to define detailed operating requirements.

Exchanges and intermediaries can prepare for the new framework now, as duties apply after commencement. The timeline for the 20% tax rate depends on when the law is formally enacted, when the Cabinet brings FIEA changes into force, and when the FSA completes detailed rules. The tax rate would then apply from the following tax year, potentially delaying implementation until 2027 or 2028.