Japan Plans to Classify Crypto as Financial Products, Cut Tax

Japan’s Financial Services Agency (FSA) is preparing an overhaul of the country’s cryptographic regulatory framework, moving to classify digital assets as “financial products” under the Financial Instruments and Exchange Act.

The plan would introduce mandatory disclosure for 105 cryptocurrencies listed on domestic exchanges, including bitcoin (BTC) and ether (ETH), and for the first time introduce them under insider trading regulations, according to to a Sunday report from the Asahi Shinmun.

If enacted, exchanges would be required to publish detailed information about each of the 105 tokens they list, including whether the asset has an identifiable issuer, the blockchain technology it is based on, and its volatility profile.

The FSA is reportedly planning to bring a new cryptocurrency bill to Japan’s main parliamentary session in 2026 for approval.

Related: Metaplanet’s Bitcoin Profits Plunge 39% As October Crash Pressures Corporate Coffers

Japan expects a 20% flat tax on cryptocurrency profits

The FSA also promotes tax reform. Japan currently taxes cryptocurrency earnings as “miscellaneous income,” meaning high-earning traders can face rates of up to 55%, one of the steepest systems in the world.

The agency now wants profits from the 105 approved cryptocurrencies to be taxed like stocks, at a flat 20% capital gains rate.

Another notable part of the proposal is an attempt to curb insider trading in the local crypto market. Under the bill, individuals or entities with access to non-public information such as upcoming listings, delisting plans or the issuer’s financial distress would be prohibited from buying or selling affected tokens.

Related: The operator of the Tokyo Stock Exchange is eyeing a crackdown on firms holding bitcoins after the DAT outage

Japan is considering allowing banks to hold bitcoins

Last month it was reported that the FSA was considering enabling banks to acquire and hold cryptocurrencies like bitcoin for investment purposes. Under current rules, banks are effectively banned from holding digital assets due to concerns about volatility, but the FSA plans to review the restrictions at an upcoming Financial Services Board meeting.