Japan’s Finance Minister Satsuki Katayama declared 2026 the “Digital Year” at the Tokyo Stock Exchange on January 5, 2026, and she explicitly backed securities and commodity exchanges as the primary on-ramp for digital assets into Japan’s regulated financial system. This positions exchange infrastructure as the front door for institutional crypto access under a tighter oversight perimeter.
She framed exchange-led integration as a way to strengthen investor protections while enabling new regulated vehicles, including ETFs and trust products, to scale inside Japan’s existing market architecture. The stated intent is to expand product access without compromising supervisory standards.
Regulatory reclassification and the 2026 implementation path
On December 10, 2025, the Financial Services Agency outlined plans to reclassify roughly 105 cryptocurrencies, including Bitcoin and Ethereum, from the Payment Services Act to the Financial Instruments and Exchange Act. This reclassification would place selected digital assets under stronger disclosure rules, insider-trading prohibitions, and the enforcement regime associated with the FIEA.
The timeline described is structured and near-term: legislative debate is expected during the 2026 ordinary Diet session, and revisions linked to the Payment Services Act are slated to become effective by mid-2026. The combination of Diet deliberation and a mid-2026 effective window creates a clear operational runway for exchanges and product sponsors.
Fiscal policy is moving in parallel, and the direction is materially more favorable for market participation. A flat 20% tax rate on crypto trading profits replaced the previous top rate of 55%, and as of 2026 investors can carry forward crypto trading losses for up to three years. These changes are being positioned as a direct reduction in compliance friction designed to improve the attractiveness of on-exchange digital products for institutional allocators.
Katayama’s message was unambiguous and tied to implementation posture rather than symbolism alone. “2026 will be designated as the Digital Year,” she said, emphasizing exchange infrastructure as the channel for broader access to digital and blockchain assets.
Exchange readiness, enforcement posture, and product rollout
Japan’s shift places meaningful operational demands on exchanges, particularly around custody, risk controls, surveillance, price-feed integration, and settlement processes that can handle digital-asset volatility and custody complexity. The operational requirement is to harden market infrastructure so that regulated access does not translate into new settlement or control vulnerabilities.
Regulators also signaled a tougher stance toward unregistered overseas platforms, including actions that forced app removals tied to unregistered exchanges in February 2025 and indications that several offshore platforms would wind down services to Japanese residents in 2026. The direction of travel is toward a more closed, registration-led market perimeter with fewer unregulated access points.
Against that backdrop, the control agenda for exchanges becomes more explicit: integrating real-time market surveillance feeds and coordinated abuse monitoring under the FIEA, establishing custody audits and standards such as proof-of-reserves and multisig or institutional custody, and tightening product governance through listing criteria and stress testing for ETFs and exchange-listed trusts. This is a controls-first build where credibility depends on provable surveillance and custody discipline.
Product development is already moving, with the first XRP ETF launched and at least two additional ETFs reported to be in the pipeline, alongside incumbent institutions preparing filings to capitalize on the new framework. Early ETF and trust activity will function as the first practical test of whether the new regime can scale without creating concentration or execution risk.
Institutional and retail participants will be watching the 2026 Diet session and the mid-2026 implementation window closely, while ETF filings and trust registrations will be the operational milestones that matter in the near term. The immediate priorities are certifying custody arrangements, validating disclosure practices, and stress-testing surveillance systems so investor protection improves without unintended market-friction tradeoffs.