FSA Moves Toward Reclassifying Crypto Assets as Financial Products

Japan may soon implement one of its most significant crypto policy shifts to date, as the Financial Services Agency (FSA) signals its intention to reclassify 105 digital assets, including bitcoin, ether, and other major tokens, as financial products. According to sources familiar with the matter, the proposal would subject these assets to oversight under the Financial Products Transaction Act, effectively aligning crypto with traditional investment instruments.

Under Japan’s current framework, crypto earnings are treated as “miscellaneous income,” which pushes some investors into tax rates as high as 55%. The FSA’s new plan would replace that system with a flat 20% capital gains tax, similar to how stock trading is taxed, dramatically reducing the burden on active crypto traders. While the regulator has not publicly commented, sources say it will ask the government to implement the tax change ahead of the next fiscal year.

The agency reportedly used a broad set when evaluating which coins qualify, examining issuer stability, technological soundness, project transparency, and volatility risk. Bitcoin, ether, and other large-cap assets are expected to make the list.

Read more: Japan PIP Stablecoin Experiment Backed by Financial Services Agency

Alongside tax reform, the FSA is also preparing new insider trading rules aimed at tightening market integrity. The proposed restrictions would bar individuals or companies connected to issuers or exchanges from trading tokens while in possession of non-public information, such as listing schedules or financial disclosures.

The timing is deliberate: the FSA wants these measures included in the national budget discussions scheduled for early 2026. If enacted, the changes could make Japan one of the most crypto-competitive tax jurisdictions among major economies.

FAQ🚀

• What is Japan proposing to change in its crypto tax system?
  Japan’s FSA plans to classify 105 crypto assets as financial products, shifting them to a lower 20% capital gains tax.
• How would this affect crypto traders in Japan?
  The move would cut tax rates dramatically for active traders currently paying up to 55% under “miscellaneous income.”
• Which assets are expected to be included?
  Bitcoin, ether, and other major tokens are expected to qualify under the FSA’s 105-asset list.
• What new safeguards are being introduced?
  The FSA is preparing insider trading rules to block issuers and exchange insiders from trading on non-public information.

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