Japan is preparing for one of its most significant crypto policy shifts yet. Regulators are planning to label digital assets as “financial products” under the Financial Instruments and Exchange Act—bringing them under the same legal framework that governs stocks and bonds.
According to local reports, the Financial Services Agency (FSA) aims to reclassify 105 cryptocurrencies, including major assets like Bitcoin and Ethereum. This move would place crypto under stricter investor protection rules and pave the way for clearer disclosures and more transparent market standards.
What the New Classification Means
Under the proposed framework:
- Approved cryptocurrencies would be treated like traditional securities
- Exchanges would need to disclose issuer details, blockchain structure, and historical volatility
- Market conduct rules would tighten, including clearer risk documentation
This would align Japan’s crypto oversight with its broader financial market, giving investors stronger protections and more reliable information.
Japan to Introduce Flat 20% Crypto Tax
For years, Japan has been known for having one of the harshest crypto tax regimes. Currently, crypto profits are categorized as “miscellaneous income”, subjecting high-income traders to tax rates as high as 55%.
But that could soon change.
The FSA is pushing for a flat 20% capital gains tax on approved cryptocurrencies bringing them in line with stocks and other traditional financial products. This shift would significantly lower the tax burden on both retail and institutional participants.
Reports of this possible reform first surfaced in June, when the FSA released a policy document outlining plans to integrate crypto fully under the Financial Instruments and Exchange Act.
Crackdown on Insider Trading and Market Abuse
As part of the overhaul, the FSA also intends to:
- Ban trading based on non-public information
- Introduce formal penalties for insider trading violations
- Strengthen overall market oversight
These measures would help Japan modernize its crypto market structure while improving transparency and fairness.
The proposal is expected to be reviewed during the 2026 parliamentary session.
Japan’s Increasingly Pro-Crypto Direction
Japan’s shift is part of a broader, long-term strategy driven by political leadership.
Former Prime Minister Shigeru Ishiba emphasized crypto’s potential to help solve Japan’s economic challenges.
Current Prime Minister Sanae Takaichi is also seen as technology-friendly, positioning Japan as one of the world’s more forward-thinking crypto jurisdictions.
Japan is even reconsidering whether banks should be allowed to hold cryptocurrencies a major shift from the FSA’s 2020 restrictions that kept banks away due to volatility risks. A review is now underway, signaling that Japanese banks could soon gain controlled access to digital assets.
Stablecoins and Blockchain Payments: Another Focus Area
Japan is also moving quickly on stablecoin innovation. Through the FSA’s Payment Innovation Project, major banks are testing:
- Yen-backed stablecoins
- Blockchain-based institutional settlement systems
These pilots aim to modernize payment infrastructure and strengthen Japan’s position in the global digital finance landscape.
