Japan To Classify Crypto As Financial Products, Eyes 20% Tax

Japan’s Financial Services Agency (FSA) is preparing to classify digital assets as “financial products” under the Financial Instruments and Exchange Act, according to a report by Asahi Shinmun. The planned regulatory overhaul would impact 105 cryptocurrencies listed on domestic exchanges, including Bitcoin (BTC) and Ether (ETH).

The move introduces mandatory disclosures for these cryptocurrencies, subjecting them to insider trading regulations for the first time. Exchanges would be required to detail information about each token, including issuer identification, blockchain technology, and volatility.

The FSA intends to present the new crypto-related law proposal to Japan’s main parliamentary meeting in 2026 for approval.

Alongside the regulatory changes, the agency is proposing a tax overhaul. Currently, crypto earnings are taxed as “miscellaneous income,” potentially reaching 55% for high earners. The FSA aims to tax gains on the 105 approved cryptocurrencies at a flat 20% capital gains rate, aligning them with stock taxation.

The proposal also seeks to curb insider trading by prohibiting trades based on non-public information, such as upcoming listings or an issuer’s financial distress.

Last month, reports surfaced regarding the FSA’s consideration of allowing banks to acquire and hold cryptocurrencies like Bitcoin for investment purposes. Current rules effectively bar banks from holding digital assets, but this restriction is under review.

The FSA is also exploring the possibility of allowing bank groups to register as licensed cryptocurrency exchanges, enabling them to offer trading and custody services directly to customers.

This comprehensive regulatory and tax overhaul signals a significant shift in Japan’s approach to digital assets.

Disclaimer: What is written here is not investment advice. Cryptocurrency investments are high-risk investments. Every investment decision is under the individual’s own responsibility.