Japan plans crypto overhaul with 20% tax proposal: reports
Japan’s Financial Services Agency (FSA) is preparing to update its cryptocurrency regulations. The agency is drafting a proposal to classify digital assets as “financial products” under the Financial Instruments and Exchange Act, as reported by the Asahi Shimbun. If implemented, the plan would subject cryptocurrencies to more stringent legal and compliance frameworks, which would affect financial institutions, traders, and exchanges nationwide.
Understanding FSA proposal
The FSA is proposing to classify cryptocurrencies as financial instruments under the Financial Instruments and Exchange Act. The move would subject digital assets to stricter regulatory oversight and provide clearer rules for institutional and investor participation.
The FSA plans to require crypto exchanges to publish detailed disclosures for all 105 approved tokens. Exchanges would need to provide information on whether a token has an identifiable issuer, technical details of its blockchain, and volatility and risk metrics. The aim is to improve transparency and help traders make informed decisions by ensuring every listed cryptocurrency includes clear, standardised data.
Insider trading regulations
For the first time, the FSA intends to apply insider trading laws to cryptocurrencies. The proposed regulations would forbid trading on the basis of non-public information, such as impending listings or delistings, issuer financial problems, or significant network modifications. In addition to addressing price fluctuations caused by information breaches and asymmetry in the cryptocurrency industry, the policy seeks to reduce market manipulation.
20 percent flat tax proposal
The FSA has proposed changing how crypto gains are taxed by introducing a flat 20 percent rate, similar to stock taxation. Currently, profits are treated as miscellaneous income, with rates reaching up to 55 percent for high earners. The new model aims to simplify taxation and reduce the burden on traders.
Additionally, Japan is considering removing regulations that prohibit banks from storing cryptocurrency. Banks are currently prohibited from holding digital assets because of concerns about risk and volatility. Banks might offer cryptocurrency trading services, custody solutions, and retain Bitcoin and other tokens if the regulations change. Retail clients would have easier access to digital assets as a result.
Regulators tighten oversight
The Japan Exchange Group (JPX) is planning stricter listing rules for companies involved in crypto-related activities. Proposed measures target backdoor listings and major corporate transformations linked to digital assets. Regulators have also warned firms that fundraising could face limits if it relies heavily on crypto purchases. At least three listed companies have paused plans to acquire digital assets after these concerns.
The overhaul aims to improve transparency through clearer disclosures, insider trading safeguards, and tax clarity. Japan is focusing on stronger oversight of the 105 tokens already listed rather than adding thousands of global alternatives. This approach is intended to create a more structured and reliable market.
Japan leads Asia’s regulatory shift
Japan is reinforcing its position as a key regulator in Asia’s crypto market. After the Mt. Gox collapse in 2014 and the Coincheck hack in 2018, the country introduced licensing for exchanges and strict custody rules.
Other Asian markets are following suit. The Virtual Asset Users Protection Act was put into place in South Korea to deal with reserve management and insider trading. Singapore is tightening its requirements for company conduct by improving its Payment Services Act. Hong Kong has adopted a different strategy, permitting retail cryptocurrency trading under a licensing system designed to attract international exchanges.
