Japan Targets Crypto Comeback With Major 20% Tax Switch

• Japan targets a 20% crypto tax and new financial-product status to rebuild local activity.
• The plan adds disclosure duties and insider trading tied to market regulatory standards.
• Regulators may let banks hold crypto and run exchanges, signaling broader rule changes.

Japan’s FSA is reportedly preparing to cut crypto taxes to a flat 20% while classifying 105 digital assets as financial products, aiming to pull trading activity back onshore and align the sector with Japan’s equity rules. The plan includes new disclosure requirements for exchanges and the country’s first insider-trading controls for digital assets.

FSA Pushes Financial-Product Classification

The FSA outlined its plan to place approved cryptocurrencies under the Financial Instruments and Exchange Act, according to Asahi Shimbun. This change would move the selected assets into the same category as equities and derivatives. 

This framework would also tie digital assets to Japan’s existing disclosure and conduct rules. The agency selected 105 tokens based on transparency, issuer stability, technology strength, and price-risk profiles. 

These criteria resemble the Japan Virtual Currency Exchange Association’s green-list standards, where 30 coins, including BTC, ETH, XRP, LTC, and MATIC, remain fully cleared. This structure links directly to Japan’s push for higher oversight depth rather than broad token availability.

The reclassification effort connects to Japan’s earlier reforms, including moves to ease unrealized-gain taxes and clarify custodian obligations. This broader regulatory path aims to rebuild a competitive environment and reduce gaps with markets operating under frameworks like MiCA.

Japan Seeks 20% Flat Crypto Tax

The agency wants the new structure to support a flat 20% capital gains tax on the approved cryptocurrencies. This rate matches stock trading and would replace the current “miscellaneous income” classification that pushes top-bracket traders toward a 55% burden. The FSA intends to request the tax change for the 2026 budget.

This switch intends to reduce offshoring and strengthen local liquidity after years of declining participation. Many traders reportedly moved activity to foreign platforms to avoid Japan’s steep brackets. A standardized capital gains rate could ease these pressures and align Japan with regions that use simplified tax models.

The measure also fits Japan’s ongoing research into stablecoin settlement, yen-based token pilots, and improved exchange governance. These efforts gained strength under former Prime Minister Shigeru Ishiba and continue under Prime Minister Sanae Takaichi, who supports advanced financial-technology regulation.

Related: Japan Targets Cryptocurrency Custodians in FSA Oversight Plan

Insider-Trading Controls and Bank Plans

The FSA plans to introduce insider-trading restrictions covering digital assets for the first time. Individuals or firms aware of non-public details such as listing schedules, issuer distress, or internal risk reviews would be barred from trading impacted tokens. The agency wants these rules to match the standards used in equity markets.

These measures would require exchanges to disclose issuer identity, blockchain architecture, and volatility data for each listed asset. Domestic platforms currently support 105 assets, and the new rules would tighten their reporting obligations further.

Japan is also reviewing whether banks can hold Bitcoin and other cryptocurrencies directly. Current guidance restricts banks from holding volatile assets, but regulators now want to reconsider those limits. The FSA is also examining whether banks should operate licensed exchanges offering trading and custody services.

This evaluation follows recent developments where several listed firms paused digital-asset expansion plans after warnings from Japan Exchange Group. Market supervisors also reviewed backdoor listing activity involving companies shifting toward crypto-heavy strategies.

Japan’s proposed 20% tax and financial-product classification is a clear attempt to reclaim competitiveness after years of capital flight. The FSA linked the plan to stronger disclosures, insider-trading controls, and potential bank participation. These combined steps outline Japan’s effort to modernize digital-asset policy and change local trading conditions through a unified regulatory approach.