Japan Moves to Put Bitcoin Under Financial Product Rules, Slash Crypto Taxes to 20%

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Japan Moves to Put Bitcoin Under Financial Product Rules, Slash Crypto Taxes to 20%

Japan’s Financial Services Agency (FSA) has reportedly finalized a sweeping plan to reclassify 105 cryptocurrencies — including bitcoin — as financial products under the Financial Instruments and Exchange Act, marking one of the country’s most significant regulatory shifts since the Mt. Gox era.

According to outlet Asahi, the move would subject these 105 assets to the same disclosure, reporting, and market surveillance standards used in Japan’s traditional securities markets. 

Exchanges listing the assets would have to publish detailed information on each token, including whether it has an issuer, the underlying blockchain architecture, and the level of price volatility.

The FSA also plans to introduce explicit insider trading rules for the crypto sector for the first time. Issuers, exchange executives, and related parties would be prohibited from trading tokens using non-public information — a category that includes planned listings, delistings, bankruptcies, or other material events.

These amendments are expected to be submitted during the 2026 ordinary Diet session.

Japan’s tax overhaul: From 55% to 20%

Alongside the reclassification, the FSA is pushing to slash the country’s notoriously high crypto tax rate. Currently, Japanese residents must declare crypto profits as “miscellaneous income,” which can push the effective tax burden to 55% for high-earning traders.

The agency wants to bring crypto taxation in line with equities — a flat 20% rate — for profits generated from the newly recognized financial products. The proposal will be reviewed during next fiscal year’s tax reform cycle and could take effect as early as 2026.

The lower rate would apply not only to individual traders but also to firms, including banks and insurers that sell crypto through securities subsidiaries.

The regulatory shift comes as Japan accelerates its Web3 ambitions. The FSA has recently reviewed rules that previously barred banks from holding volatile assets like bitcoin, opening the door for lenders to treat digital assets more like stocks or government bonds.

It is also considering allowing banks to operate crypto exchanges and custody services.

This follows rapid growth in domestic adoption in the country — more than 12 million crypto accounts were registered as of early 2025 — and a push for a regulated yen-stablecoin ecosystem. MUFG, SMBC, and Mizuho are already collaborating on yen-pegged tokens, while Japan’s first locally regulated stablecoin, JPYC, launched on October 27.

Major Japanese banks have already signaled their interest in expanding crypto services. Mitsubishi UFJ Financial Group, Sumitomo Mitsui Banking Corp., and Mizuho Bank have collaborated to issue stablecoins pegged to both the Japanese yen and the U.S. dollar.

A great example of the country’s booming crypto market comes from Metaplanet. Metaplanet has acquired and held Bitcoin as a treasury reserve while launching Bitcoin-backed financial products to generate income in Japan’s low-yield market. 

The company raises capital through equity and preferred shares, similar to Strategy, to fund its Bitcoin purchases. 

This post Japan Moves to Put Bitcoin Under Financial Product Rules, Slash Crypto Taxes to 20% first appeared on Bitcoin Magazine and is written by Micah Zimmerman.

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