Japan's Crypto Regulatory Overhaul: A Look Ahead

Japan is gearing up for sweeping changes in how it regulates cryptocurrencies, with the Financial Services Agency (FSA) looking to revamp existing rules. This proposed regulatory overhaul, expected to be presented to parliament in 2026, would place digital assets under the purview of the Financial Instruments and Exchange Act, marking a significant shift in how these assets are treated.

Reclassifying Digital Assets and Mandatory Disclosures

Under the proposed plan, cryptocurrencies would be classified as "financial products," necessitating mandatory disclosures for 105 cryptocurrencies listed on domestic exchanges, including Bitcoin (BTC) and Ether (ETH). Exchanges would be required to disclose detailed information about each token, such as whether the asset has an identifiable issuer, the blockchain technology underpinning it, and its volatility profile.

Crackdown on Insider Trading

The regulatory overhaul would also subject cryptocurrencies to insider trading rules for the first time. Individuals or entities with access to non-public information, such as upcoming listings, delisting plans, or an issuer's financial distress, would be prohibited from buying or selling affected tokens.

Proposed Tax Adjustments

In addition to regulatory changes, the FSA is pushing for tax reform. Japan currently taxes crypto earnings as "miscellaneous income," meaning high-earning traders can face rates of up to 55%, one of the steepest in the world. The agency now wants gains on the 105 approved cryptocurrencies to be taxed similarly to stocks, at a flat 20% capital gains rate.

Allowing Banks to Hold Bitcoin

The FSA is also considering allowing banks to acquire and hold cryptocurrencies like Bitcoin for investment purposes. Under current rules, banks are effectively barred from holding digital assets due to volatility concerns, but the FSA plans to revisit the restrictions at an upcoming meeting of the Financial Services Council.

Allowing Banks to Register as Crypto Exchanges

The regulator is reportedly also exploring whether bank groups should be permitted to register as licensed cryptocurrency exchanges, enabling them to offer trading and custody services directly to customers. This move could further integrate cryptocurrencies into Japan's traditional financial system.


Risk Warning: this article represents only the author’s views and is for reference only. It does not constitute investment advice or financial guidance, nor does it represent the stance of the Markets.com platform.When considering shares, indices, forex (foreign exchange) and commodities for trading and price predictions, remember that trading CFDs involves a significant degree of risk and could result in capital loss.Past performance is not indicative of any future results. This information is provided for informative purposes only and should not be construed to be investment advice. Trading cryptocurrency CFDs and spread bets is restricted for all UK retail clients. 

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