FSA Targets Stronger Oversight, New Disclosure Rules, and Clearer Tax Treatment
Japan is preparing one of its most significant regulatory shifts in years as the Financial Services Agency (FSA) moves to reclassify digital assets as “financial products” under the country’s Financial Instruments and Exchange Act. The plan, expected to reshape oversight of the domestic crypto market, introduces new disclosure obligations, insider-trading rules, and a potential reduction of Japan’s notoriously high crypto tax rate.
This move reflects Japan’s broader push to create a more transparent, investor-friendly, and institutionally aligned crypto framework.
FSA Prepares to Classify Crypto as Financial Products
According to reports from local media, the FSA intends to bring crypto assets under the same disclosure and transparency regime applied to traditional financial instruments.
If enacted, exchanges would need to publish detailed information for 105 approved cryptocurrencies, including Bitcoin and Ether, covering an asset’s technology, issuer information, and volatility characteristics.
An industry analyst noted that Japan is aiming to “formalize crypto within its established financial-market structure, signaling a transition toward deeper institutional acceptance.”
A key part of the proposal includes extending insider-trading regulations to digital assets for the first time. Individuals with access to non-public listing data, delisting decisions, or information about a project’s financial troubles would be prohibited from trading the affected tokens.
Japan Eyes 20% Flat Tax on Crypto Earnings
Japan currently taxes crypto gains as “miscellaneous income,” with rates that can climb as high as 55%, among the highest in the world.
The FSA now wants to simplify this system by taxing gains from the 105 approved cryptocurrencies at a flat 20%, similar to stock trading.
Market participants view this as a move that could boost domestic trading activity, reduce offshore flight, and make Japan a more competitive jurisdiction for crypto investors.
Extending Rules to Prevent Market Abuse
The FSA also plans stricter measures to curb market manipulation. Under the proposal, insiders—including exchange employees or token issuers—would face explicit bans on exploiting confidential information tied to listing decisions or financial distress.
This would mark Japan’s first comprehensive framework targeting insider behavior in crypto markets, reflecting growing concerns about unequal access to sensitive market-moving data.
Japan Considers Allowing Banks to Hold Bitcoin
Regulators are also weighing whether banks should be allowed to hold Bitcoin and other crypto assets—a sharp departure from existing rules that bar direct exposure due to volatility.
The FSA is studying whether banking groups could eventually register as licensed crypto exchanges, enabling them to provide custody and trading services directly to customers.
By combining financial-product classification, structured disclosure requirements, insider-trading safeguards, and a more competitive tax regime, Japan is signaling a shift toward full institutional integration of digital assets.
If approved in the 2026 parliamentary session, the reforms could reshape Japan’s crypto landscape and set a precedent for other advanced economies looking to modernize regulations.
Disclaimer
This content is for informational purposes only and does not constitute financial, investment, or legal advice. Cryptocurrency trading involves risk and may result in financial loss.