Japan is preparing for a radical transformation in cryptocurrency regulations, a policy it has approached cautiously for years. The country's Financial Services Agency (FSA) has completed a comprehensive reform package that plans to classify 105 crypto assets as "financial products." This step is part of a strategic transformation aimed at both strengthening investor protection and re-establishing the country as a Web3 hub.
Cryptocurrency Regulation in Japan: Activity
According to local sources, the FSA envisions the inclusion of these 105 crypto assets under the Financial Products and Exchange Act. This group includes assets such as Bitcoin, Ethereum, and the Shiba Inu, recently added to Japan's "Green List." The new classification imposes mandatory transparency obligations on exchanges. For each token, exchanges will be required to clearly disclose the issuer, blockchain technology, volatility level, and key technical specifications.
The FSA does not want regulations to be limited to transparency and information sharing. The draft package proposes new sanctions for insider trading in crypto assets. Accordingly, those with access to non-public information, such as a token listing schedule, delisting decision, or the financial status of crypto companies, will not be able to trade in these assets. This step represents an adaptation of rules that have been in place in traditional markets for years to crypto.
The second leg of the reform directly concerns investors. In Japan, crypto gains are currently taxed under the "miscellaneous income" category, with the rate reaching as high as 55 percent for higher-income brackets. The FSA is preparing to radically change this situation. If the proposal is passed, the tax rate for 105 approved crypto assets will be reduced to 20 percent, similar to that for stock gains. This will both provide relief for individual investors and make the country a more attractive hub for regional competition.
The tax reform is expected to be evaluated in the next fiscal year. Legal changes are planned to be discussed during the regular parliamentary session in 2026.
All these steps are considered one of the biggest policy shifts in Japan's approach to cryptocurrencies in years. Following the Mt. Gox collapse, the country was long associated with strict regulations; However, over the past two years, the government and the FSA have been actively working to strengthen the Web3 ecosystem. Last month, it was revealed that regulations that could allow banks to hold crypto assets like Bitcoin for investment purposes were being reviewed. Furthermore, the country's first yen-backed stablecoin, JPYC, officially launched at the end of October.
The new approach, which elevates crypto to financial product status, offers clearer rules and stronger oversight for both local exchanges and institutional investors. The combination of investor protection and lower tax rates could pave the way for Japan to once again become a strong player in the crypto market.
