Bitcoin News: FSA Seeks to Label BTC as Financial Products

Japan’s FSA plans to reclassify BTC and ETH as “financial products,” proposing a tax overhaul to a flat 20% capital gains rate and new insider trading rules.

Japan’s Financial Services Agency (FSA) plans to reclassify 105 crypto assets. These include BTC and ETH. They will be labeled as “financial products.” The FSA also wants to press for a tax overhaul. This is for fiscal year 2026. This would reduce the current progressive crypto tax rate and it is up to 55%. It would be a flat 20% capital gains tax.

Japan’s FSA Targets Crypto Reclassification and Tax Overhaul

The agency is also looking at new insider trading rules. These would ban affiliated entities from trading on undisclosed information. This is a token listing or financial conditions.

Japan’s top financial overseer has signaled it is thinking so. It plans to reclassify 105 crypto assets. This includes Bitcoin and Ethereum. These will turn out to be financial products. This is according to Asahi Shinmun. The newspaper’s sources were Financial Services Agency sources. They said the coins would become subject to policing. This would be under the terms of the Financial Products Transaction Act.

“The FSA will also ask the government to enforce the tax rate cut in advance of the next financial year,” Asahi wrote. “These will be similar to those used in stock trading.” If the FSA has its way, this may effectively see an end to Japan’s much-maligned crypto tax system. This is the case with traders of some of the most cap tokens in the world.

Capital gains rules would be applicable. At present, the Japanese people are required to report on the profits from crypto. These are listed as “miscellaneous income” in annual tax returns. This change would move them to capital gains.

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Classifying them as financial products is a huge step. There will be information disclosure requirements for 105 stocks handled by exchanges. They will also be liable for insider trading regulations. The agency is also seeking tax rate reductions. These are the same as the ones for stock trading. They are penciled in for next fiscal year’s tax reforms. The aim is to submit the bill. This bill would amend the law. It would go to the session of the ordinary Diet in 2026.

Mandatory Disclosure and Insider Trading Restrictions for Crypto Assets

Mandatory disclosure of information is a major part. Restrictions on insider trading are also very important. Domestic exchanges currently share 105 crypto assets. This includes Bitcoin and Ethereum. There are said to be tens of thousands of crypto assets. However, the Financial Services Agency are required to get exchanges to share information. This applies to these 105 brands, in particular.

Specifically, they request disclosure of the characteristics of cryptocurrencies. This includes whether they have an issuer. It also deals with the underlying technologies used. Examples include Blockchain (distributed ledger). The risk of price fluctuations also needs to be revealed. This is to bring more transparency to investors.

The bill also has restrictions for insider trading. It bans the people for the issuers and exchanges. They are not able to buy and sell shares. This is if they do know important facts. Examples would be the start or end of trading.

It also includes the bankruptcy of an issuer. This is before such information is made public. These measures are intended to avoid unfair practices in the market. They are also trying to protect investors. This holistic regulatory drive is a sign of Japan’s commitment. It wants to incorporate cryptocurrencies into its traditional financial structure.

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