Japan Plans to Classify Crypto as Financial Products, Cut Tax

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

The plan will introduce mandatory disclosures for 105 cryptocurrencies listed on domestic exchanges, including Bitcoin (BTC) and ether (ETH), and brings them under the regulation of insider trading for the first time, according to to a report on Sunday by Asahi Shinmun.

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

The FSA plans to bring the new crypto-related bill to Japan’s main parliamentary meeting in 2026 for approval.

Related: Metaplanet’s Bitcoin Earnings Plunge 39% As October Crash Pressures Corporate Treasurers

Japan sees 20% flat tax on crypto earnings

The FSA is also pushing for a tax overhaul. Currently, Japan taxes crypto earnings as “variable income,” which means high-earning traders can face taxes of up to 55%, one of the steepest systems in the world.

The agency now wants gains on the 105 approved cryptocurrencies to be taxed similarly to stocks, at a 20% capital gains rate.

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

Related: Tokyo exchange operator eyes crackdown on Bitcoin-holding firms after DAT rout

Japan Weighs Allowing Banks to Hold Bitcoin

Last month, it was reported that the FSA is being considered which allows banks to acquire and hold cryptocurrencies such as Bitcoin for investment purposes. Under current rules, banks are effectively barred from holding digital assets due to volatility concerns, but the FSA plans to revisit the restrictions at an upcoming Financial Services Board meeting.