Japan Unveils Sweeping Crypto Reforms: 105 Digital Assets to Be Reclassified as Financial Products, Major Tax Cuts Expected

Japan is on the cusp of a monumental shift in its cryptocurrency regulatory landscape. The nation’s Financial Services Agency (FSA) has reportedly finalized ambitious plans to formally integrate 105 cryptocurrencies, including industry giants Bitcoin (BTC) and Ethereum (ETH), into the ambit of the Financial Instruments and Exchange Act. This pivotal move will reclassify these digital assets as traditional financial products, signaling a new era of oversight and legitimacy for the burgeoning sector.

Enhanced Transparency and Investor Protection

According to a report by Asahi Shimbun, this comprehensive reclassification initiative will bring a significant portion of the crypto market under stricter regulatory scrutiny. Once implemented, these 105 digital assets will be subject to rigorous information disclosure requirements, mirroring those applied to conventional financial instruments. Crypto exchanges operating in Japan will be mandated to provide a wealth of crucial data for each listed cryptocurrency, encompassing:

• The existence and identity of the token’s issuer.
• Details of the underlying blockchain technology.
• Comprehensive insights into the asset’s price volatility.

Cracking Down on Insider Trading

Beyond disclosure, the FSA is also poised to introduce robust measures designed to prevent insider trading within the crypto sphere. Future regulations are expected to strictly prohibit token issuers and exchange executives from leveraging non-public information—such as upcoming exchange listing schedules—to engage in crypto asset transactions. This proactive step aims to foster a fairer and more equitable trading environment for all participants, enhancing market integrity.

Legislative Timeline and Broader Implications

These transformative changes are anticipated to be formally introduced as amendments to Japan’s financial regulations during the ordinary session of the Diet in 2026. The reclassification of crypto assets as financial products underscores Japan’s commitment to integrating digital currencies into its established financial framework, potentially setting a precedent for other global economies grappling with crypto regulation.

Historic Tax Relief for Crypto Investors

In tandem with the regulatory overhaul, Japanese authorities are simultaneously initiating a groundbreaking tax reform that promises significant relief for crypto investors. Currently, individuals profiting from cryptocurrency investments face a steep progressive tax rate, categorized as “miscellaneous income,” which can soar as high as 55%.

If the proposed reforms are approved, this burdensome tax rate will be uniformly slashed to a flat 20%. This dramatic reduction will align cryptocurrency investment taxation with that of traditional stock investments, making Japan a far more attractive jurisdiction for crypto enthusiasts and institutional investors alike. This pivotal tax reform is slated for deliberation in the upcoming fiscal year, marking a significant step towards mainstream adoption and investment in digital assets.