Japanese Finance Minister Satsuki Katayama announced on July 10, 2026, that the government is on track to legalize cryptocurrency exchange-traded funds (ETFs) within the country. Speaking at the “Open QUICK 2026” seminar hosted by the financial information provider QUICK, Katayama confirmed the administration’s intent to study the introduction of these products to match overseas successes.
This regulatory pivot follows a legislative revision passed by the House of Representatives that shifts the oversight of spot cryptocurrencies from the Payment Services Act (PSA) to the Financial Instruments and Exchange Act (FIEA).
The reclassification under the FIEA elevates crypto assets to the status of fully regulated “financial products,” effectively treating them similarly to traditional stocks and bonds. This move aims to provide a more transparent trading environment, ensuring market fairness and investor protection while fostering greater innovation. Government officials noted that the reform is designed to improve rules so that institutional and retail investors can trade with confidence.
The transition is also viewed as a necessary step to keep pace with global developments, particularly the adoption of crypto-linked investment vehicles in the United States.
Japan’s Cabinet originally approved a draft amendment to classify crypto as a financial product in April 2026. Following the House of Representatives’ approval in June, the new FIEA regime is likely to take effect in 2027 if it passes the current Diet session. com/bitcoin-exchange-supply-eight-year-lows-analysis/”>investor sentiment shifts toward regulated products, this legal clarity is expected to fuel institutional inflows.
The Financial Services Agency (FSA) is reportedly planning to establish a dedicated unit for crypto assets and stablecoins as early as July 2026 to manage the new regulatory landscape.
Tax reform and cryptocurrency reclassification
A major component of this initiative involves significant tax reform aimed at attracting capital. Currently, crypto trading gains are subject to miscellaneous income tax rates that can reach as high as 55%. The Liberal Democratic Party (LDP)’s Parliamentary Association for the Promotion of Blockchain submitted recommendations to Finance Minister Satsuki Katayama on June 1, 2026, advocating for a flat 20% tax rate. This adjustment would align crypto assets with the taxation levels seen in traditional investment trusts and stocks.
If the proposal is finalized, the flat 20% rate is expected to be applied starting January 1, 2028. This change is intended to bolster short-term risk appetite and strengthen the foundation for both institutional and retail capital. By expanding legal investment channels, Japan seeks to move forward without falling behind global fintech trends.
com/xrp-speculative-activity-resistance-analysis-2026/”>speculative activity returning to the market suggests that these clearer tax guidelines could provide the legal certainty required for broader participation.
Beyond the ETF sector, the LDP is pushing for stronger support for yen-denominated stablecoins. The goal is to promote these assets for cross-border payments across Asia, integrating digital finance more deeply into the regional economy. This multi-pronged approach involves amending existing laws to ensure that Japan remains competitive in the digital asset space while maintaining monetary stability and transparency.
SBI Holdings proposes dual-asset and hybrid products
Financial behemoth SBI Holdings has already moved to capture a first-mover advantage in this emerging market. In May 2026, the company submitted filings for a new cryptocurrency ETF product that would provide regulated exposure to both Bitcoin and XRP. SBI has maintained a long-standing relationship with Ripple and seeks to leverage this history to attract investors looking for diversification beyond the flagship cryptocurrency.
In addition to the dual-asset ETF, SBI proposed a hybrid investment trust designed to appeal to conservative investors. The proposed allocation for this hybrid product includes:
- 51% allocation to gold-based ETFs
- 49% allocation to crypto-asset ETFs (such as Bitcoin ETFs)
This combination aims to blend the “digital gold” narrative of Bitcoin with the traditional stability of physical gold. The company has set an ambitious target to secure approximately ¥5 trillion (roughly $32 billion) in assets under management (AUM) within three years of the product’s launch. SBI anticipates competition from other domestic giants, including Nomura and Rakuten Securities, who may also enter the sector as legalization progresses.
com/vaneck-grayscale-spot-bnb-etf-filing-updates-analysis-2026/”>spot ETF filing updates continue globally, Japanese firms are positioning themselves to dominate the domestic market as soon as the TOKYO Stock Exchange allows listings.
While some reports suggest that the full regulatory changes permitting these ETFs could extend into 2028, the initial reclassification of crypto as a financial product remains the primary focus. The government’s move to relegate spot assets to the FIEA provides the necessary structural shift to move away from the “means of payment” definition found in the PSA, ultimately allowing crypto to be traded as a legitimate asset class in the Japanese financial system.