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Home/Markets & Investing/CRYPTO IRS RULING · CRYPTO REGULATION BILL

Japan Reclassifies Crypto as Financial Instruments to Unlock Domestic Venture Capital

JW

Jamie Wilde

crypto IRS ruling · Apr 11, 2026

Japan Reclassifies Crypto as Financial Instruments to Unlock Domestic Venture Capital

Source: The Digital Ledger Data Terminal

Domestic venture capital funds can now deploy capital into crypto without restructuring through foreign entities. This shift follows an April 10 Cabinet approval of a bill reclassifying crypto as a financial instrument under the amended Financial Instruments and Exchange Act. The move pulls digital assets out of the Payment Services Act framework and places them on the same legal footing as stocks and bonds.

Related Brief19h ago
cryptocurrency regulation

Coinbase backs crypto bill as stablecoin compromise nears, signaling shift from opposition

Coinbase CEO Brian Armstrong now supports the Clarity Act crypto bill, marking a shift from the company's prior stance of neutrality or opposition. The exchange had previously resisted the bill due to unresolved concerns over restrictions on stablecoin yields. Those provisions are now close to resolution, with chief legal officer Paul Grewal stating, "the legislation is almost final." The shift signals a growing alignment between major crypto firms and regulators. U.S. Treasury Secretary Scott Bessent has urged Congress to fast-track the bill, emphasizing the need for structured oversight of digital asset markets. The Clarity Act will establish clear regulatory standards for stablecoins, trading platforms, and compliance frameworks. Its passage is widely seen as a prerequisite for institutional capital to enter the crypto market at scale. Regulatory certainty, not market price, is now the key determinant of investor positioning.

For the 105 cryptocurrencies flagged by the FSA, including Bitcoin and Ethereum, the compliance surface area has expanded. Issuers now face mandatory annual disclosure requirements covering technology, token supply, and risk factors, matching the disclosure regime Japanese equity issuers operate under.

Related Brief1d ago
cryptocurrency regulation

Japan's Crypto Reclassification May Unlock Pension Fund Capital

Institutional capital and pension-fund allocations may now be unlocked for Japanese crypto assets. This shift follows the cabinet's April 10, 2026, approval of an amendment to the Financial Instruments and Exchange Act (FIEA), which officially classifies crypto assets as financial instruments. Previously, these assets operated under the Payment Services Act (PSA), which defined them as non-fiat payment instruments. The FIEA amendment elevates digital currencies to regulated investment products on par with stocks and bonds. Under this new framework, issuers must adhere to disclosure obligations and prohibitions on unfair trading practices. While compliance costs will increase for dealers, potentially consolidating the market around well-capitalized players, the change provides the regulatory clarity required for institutional entry. Parallel tax reforms may move crypto gains to a flat 20% capital-gains rate.

The structural change arrives via the LPS Act amendment, which removes the legal prohibition on Japanese venture capital funds structured as investment limited partnerships from holding crypto assets directly.

Related Brief9h ago
financial regulation

CFTC Task Force Signals End of Regulation by Enforcement

Crypto innovators will now have a predictable regulatory environment instead of an enforcement-driven model. This shift is driven by the Commodity Futures Trading Commission (CFTC) and its newly launched Innovation Task Force (ITF). The ITF is composed of a public regulators and private-sector experts from law firms, the Blockchain Association, and DeFi funds. The task force focuses on crypto, blockchain, AI, and prediction markets to establish clear guidelines. CFTC Chairman Michael S. Selig stated the goal is to provide "rules of the road" for innovators.

crypto IRS rulingcrypto regulation bill

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