Japan Moves to Slash Crypto Taxes and Label Bitcoin as a Financial Product
FSA proposal would cap tax at 20% and put crypto under stock-style rules
Japan’s Financial Services Agency (FSA) is preparing a major shake-up of the country’s crypto rules that would treat many digital assets more like traditional financial products and lower the tax burden on investors. Under the plan, cryptocurrencies such as Bitcoin and Ether would be classified as “financial products” under the Financial Instruments and Exchange Act, bringing them closer to the regulatory framework used for stocks.
The proposal would apply to 105 cryptocurrencies currently listed on domestic exchanges. Trading platforms would be required to publish detailed information on each token, including whether there is a clear issuer, what blockchain technology supports it, and how volatile the asset is. These tokens would also come under insider trading rules for the first time, aiming to prevent market manipulation and unfair advantages. The FSA intends to submit the new crypto bill to Japan’s main parliamentary session in 2026.
Alongside the regulatory shift, the FSA is also pushing to overhaul how crypto gains are taxed. At present, profits from digital assets are treated as “miscellaneous income,” with top earners facing rates as high as 55%. The new proposal would tax gains on the 105 approved cryptocurrencies at a flat 20% rate, similar to capital gains on equities, potentially making Japan a more attractive market for both retail and professional traders.
The agency is also examining whether to relax long-standing restrictions on banks. Officials are considering allowing banks to acquire and hold cryptocurrencies like Bitcoin for investment purposes and to let banking groups register as licensed crypto exchanges. That would open the door for major financial institutions to offer crypto trading and custody services directly to customers, signaling a deeper integration of digital assets into Japan’s mainstream financial system.
