Japan plans to treat crypto as financial products under new bill

Japan’s framework would pull roughly 105 cryptocurrencies already approved for domestic exchange listing into a regime familiar from equities and derivatives, introducing mandatory disclosures on issuer identity, technology, and volatility, and barring trading on undisclosed listing or issuer information. The FSA has also floated a shift to a flat 20% capital-gains tax on those tokens, replacing today’s “miscellaneous income” treatment that can reach effective rates above 50%.

Under the proposal, insider-trading prohibitions would extend to anyone in possession of “important facts,” such as non-public listing timelines, delisting decisions, or issuer distress. Exchanges and service providers would need internal controls to prevent access-based trading and to document material information flows that could influence token prices. These provisions mirror FIEA Articles 166–167 and would align crypto with the playbook used for stocks, options, and structured notes.

Tax treatment is the second pillar. Today, individual crypto profits can be taxed as ordinary income; the contemplated change would place gains from the 105 FSA-approved assets on the same platform as equities at a 20% flat rate, a shift regulators and industry argue could revive domestic liquidity by reducing tax-driven frictions for active traders. Any change would require Diet approval.

The plan also explores limited bank participation. Policymakers are studying whether commercial banks could hold crypto on balance sheet and whether banking groups could operate licensed exchanges, which would be a notable shift for a G7 market that historically ring-fenced volatile assets from deposit-taking institutions. The discussion is at the exploratory stage and would be tied to the broader FIEA/PSA amendments.

Context matters. Japan was an early mover on exchange licensing and custody safeguards after Mt. Gox downfall, but it has kept crypto within the Payment Services Act, emphasizing user protection and settlement rather than market-abuse policing. Reclassification to “financial products” would move tokens into a disclosure- and surveillance-heavy lane, adding formal insider-trading enforcement and standardized prospectus-style information for listed assets. Industry watchers note that aligning tax and market-abuse rules with equities would reduce regulatory fragmentation between digital assets and traditional instruments.