Japan moves to reclassify crypto and adopt major tax relief: report
Quick Take Japan’s FSA has reportedly finalized plans to reclassify 105 cryptocurrencies as financial products. It also seeks to reduce the current maximum 55% tax on crypto gains to 20%, aligning it with stock income tax rates.
Japan's Financial Services Agency has finalized plans to reclassify certain cryptocurrencies as financial products under the Financial Instruments and Exchange Act, while also seeking to cut taxes on crypto income.
According to a report from Asahi, the reclassification will subject 105 cryptocurrencies, including bitcoin and ether, to new disclosure requirements. Exchanges listing these crypto assets will be required to disclose their key characteristics such as whether the token has an issuer, the underlying blockchain technology and price volatility.
The FSA also plans to introduce preventive measures on insider trading, potentially prohibiting issuers or exchange executives from trading crypto assets based on non-public information, including exchange listing schedules.
These changes are expected to be submitted as amendments to Japan's financial laws during the ordinary Diet session in 2026, according to the report.
Tax cut
As these 105 crypto assets move toward being treated as traditional financial products, Japanese authorities are seeking to lower the tax rate on crypto income to match that of stock investments — from a maximum of 55% to 20%. The tax reform is expected to be reviewed in the coming fiscal year, Asahi reported.
Japan, which assumed a rather cautious stance on digital assets after Mt. Gox collapsed, has begun actively reforming its financial system to reinvent itself as a Web3 hub.
Last month, the FSA was reportedly looking into ways to allow local banks to trade cryptocurrencies like stocks and government bonds. It has also been pushing a yen-pegged stablecoin initiative, with the country's first local stablecoin JPYC going live on Oct. 27.
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