The Financial Services Agency (FSA) of Japan has announced its intention to classify 105 cryptocurrency assets, including well-known currencies such as Ethereum and Bitcoin, as financial products under the Financial Instruments and Exchange Act.
The goal of the regulatory reform is to bring digital assets into line with Japan’s current securities and derivatives framework, modernising the country’s attitude to them.
FSA Shifts Regulatory Approach
The proposal aims to be included in Japan’s 2026 budget. By reclassifying cryptocurrencies as financial products, the FSA will enable taxation of profits from trading these assets at a uniform capital gains rate of 20%.
This marks a significant shift from the current regime, where crypto earnings are categorized as “miscellaneous income” and are subject to a maximum tax rate of 55% for high-earning traders. The new tax policy aims to make digital asset investments more attractive, encourage local market participation, and harmonize tax treatment with that of traditional stock transactions.
The FSA’s initiative takes into account the technological stability. Additionally, it considers the transparency and circulation of each of the 105 assets listed on domestic exchanges. Assets must meet standards related to project integrity, issuer reputation, and sustained market presence to qualify for financial product classification.
Stricter Compliance, Disclosure, and Insider Trading Controls
The updated framework would also impose stricter regulatory requirements on cryptocurrency exchanges doing business in Japan. Every token listed will have to make mandatory disclosures. These will include information on its issuer, underlying technology, and volatility profile. By taking this action, the Bitcoin industry becomes more transparent and raises investor protection requirements.
To combat insider trading in the cryptocurrency market, the FSA also intends to enact new regulations. Similar to conventional equity markets, people and businesses who have access to confidential, market-moving information, such as impending token launches or private financial information, may be prohibited from trading or subject to stricter regulations.
When taken together, these modifications should strengthen regulatory supervision, reduce the possibility of market manipulation, and promote greater industry integration. Treating well-known digital assets as financial products positions Japan to improve compliance. Additionally, it enables expedited investment and establishes a model for other countries thinking about implementing similar changes.
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