Japan’s FSA Reclassifies Crypto, Sets New Tax and Trading Rules

• Japan plans to reclassify 105 cryptoassets as financial products.
• Capital gains tax on crypto may drop to a flat 20%.
• Insider trading restrictions for crypto-linked entities are expected.
• FSA selection criteria include transparency and project stability.

The Financial Services Agency in Japan has proposed the reclassification of 105 cryptocurrency assets, including Bitcoin and Ethereum, as financial products. This means that the cryptocurrencies will be regulated by the Financial Products Transaction Act.

This proposed initiative will help ensure a greater regulatory influence over the digital currency and protection for investors. The reclassification indicates that the government has shifted its policy approach regarding cryptocurrencies.

The agency reportedly evaluated coins based on project transparency, issuer reputation, and technological stability. Price volatility and financial soundness also played a role in deciding which tokens to include. If approved, the list will cover some of the largest and most widely traded coins. This represents a significant step toward mainstream acceptance of crypto in Japan.

At the moment, Japanese crypto traders are taxed based on profits, categorized as “miscellaneous income.” Traders earning more are liable to a flat rate of 55%. This has been deemed too taxing in comparison to other international norms. The FSA plans to recommend a flat rate of 20% for the capital gains tax on the 105 reclassified coins.

Also Read: Japan Exchange Group (JPX) Weighs Tougher Regulations for Digital Asset Firms

Japan Aligns Crypto Taxation With Stocks

The change would align crypto taxation with stock trading rules. This means traders would be able to easily determine gains earned and optimize gains reaped. The proposed policy will be effective in the fiscal year 2026, pending government approval. If so, it could promote local investment in cryptocurrencies.

The FSA also plans to tighten insider trading regulations. Individuals and companies linked to crypto issuers or exchanges could face bans on trading while in possession of undisclosed information. This includes upcoming token listings and sensitive financial data.

FSA Implements Rules To Prevent Manipulation

The new rules aim to prevent market manipulation and protect ordinary investors. By reducing the possibility of non-equitable advantages, the FSA attempts to promote transparency in the crypto markets. These proposals are expected to accompany the budget for the year 2026.

The Japan Virtual Currency Exchange Association has its own ‘green list’ of approved coins. The current list consists of 30 tokens, which include BTC, ETH, MATIC, XRP, and LTC coins. For a coin to be considered, it has to fulfill rigorous standards, like having exchange listings in several JVCEA exchanges, among others, in addition to having a stable presence in the market for at least six months.

Also Read: WisdomTree launches Stellar ETP, XLM targets $0.36