Japan's House of Councillors passed the bill to amend part of the Financial Instruments and Exchange Act and the Payment Services Act on Wednesday.
With 211 votes in favour out of 242 total votes cast, the passed bill was sent to the House of Representatives, according to The National Diet of Japan website.
With the legislation passed, cryptocurrency is reclassified as "financial assets" under the Financial Instruments and Exchange Act, moving it from the Payment Services Act, NHK reported on the same day.
The reclassification introduces stricter regulations, including insider trading rules and harsher penalties for unregistered operators, as crypto user accounts grow steadily in Japan, with the new treatment taking effect within a year, the report said.