Japan Plans to Classify Crypto Under Insider Trading Rules, Cut Taxes

Japan’s Financial Services Agency (FSA) is considering implementing new regulations that would classify cryptocurrencies as financial products, subject them to insider trading rules, and impose a reduced tax rate on profits. The Asahi Shimbun, a major Japanese daily newspaper founded in 1879, reported the news on Sunday that the Financial Services Agency had decided to apply the Financial Instruments and Exchange Act to crypto assets (virtual currencies), classifying them as financial products. Information disclosure would be required for 105 stocks handled by exchanges, and they would be subject to insider trading regulations. According to the newspaper, the FSA is also requesting tax rate reductions similar to those for stock trading, enabling the tax reforms to take effect in the 2026 fiscal year. The media also reported that the bill is likely to be submitted to the ordinary Diet session in 2026, and the law will soon be passed.    

According to the newly proposed plan, 105 types of cryptocurrencies in Japan, including Bitcoin and Ethereum, would require service providers to reveal information like the risk of price fluctuations. Asahi Shimbun published that they called for the disclosure of the characteristics of cryptocurrencies, such as whether or not they had an issuer, the underlying technologies used, such as blockchain (distributed ledger), and the risk of price fluctuations. As per the latest news reports, under the new regulations in Japan, banks and insurance firms will be allowed to transact with cryptocurrencies, like selling them to depositors and insurance holders through their securities subsidiaries. These proposed changes will allow the Financial Services Agency (FSA) and Securities and Exchange Surveillance Commission (SESC) to oversee, investigate, and even penalize insider trading and market manipulation in the crypto sector. 

Crypto Assets Taxation to Change From Maximum 55% to A Flat 20%? 

In the newly proposed digital asset plan, the Financial Services Agency is also reviewing the tax system to lower the tax on cryptocurrency profits. Currently, the tax is treated under “miscellaneous income.” With the change in trading rules and tax system, a flat 20% separate tax rate, the same as stocks, can be expected. According to Japan’s current tax system, a total percentage of 55 is levied depending on income, and Japan is a country with one of the strictest tax systems in the world. 

The Financial Services Agency’s push to reclassify digital assets like BTC and ETH under the Financial Instruments and Exchange Act would lessen the tax burden for high-income cryptocurrency investors and encourage domestic trading and institutional participation. Crypto experts believe that the initiative from the FSA would align Japan’s tax treatment with global standards similar to the U.S., U.K., and Singapore. 

The proposed changes would add regulatory enhancements as well. According to crypto experts, the changes in the regulatory part would improve transparency and investor protection, legitimize crypto, and make it Japan’s part of the broader financial ecosystem, and even attract global firms to operate under Japan’s well-crafted financial and regulatory framework.   

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