Japan’s Financial Services Agency is preparing a sweeping overhaul of the country’s crypto rules, the one that pairs a major tax cut with a dramatic expansion of regulatory oversight, local media outlet reports.
Tax Cuts in Exhange for Oversight
Under the proposal, the tax rate on crypto gains would drop from as high as 55% to a flat 20%, aligning digital assets with the tax treatment of stocks and other capital gains. The measure is being considered as part of Japan’s next annual tax reform cycle and is seen as a major step toward revitalizing domestic participation in digital assets.
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However, the favorable tax shift comes with strict new obligations. The FSA plans to reclassify crypto assets as “financial products” under the Financial Instruments and Exchange Act, which would subject the industry to the full regulatory framework applied to traditional securities.
If enacted, domestic exchanges will be required to provide mandatory disclosures for all 105 cryptocurrencies currently listed on licensed Japanese trading platforms, including Bitcoin and Ether. The proposal is expected to be submitted to Japan’s ordinary parliamentary session in 2026.
Mandatory Disclosure Framework
The FSA intends to introduce extensive disclosure requirements, bringing crypto assets closer to conventional financial instruments. Exchanges would need to publish detailed information on each of the 105 approved tokens.
This would include the type and characteristics of each asset, such as whether it has an identifiable issuer, details about the underlying technology like the specific blockchain or distributed ledger used, the asset’s volatility profile and market risks, and any other material factors that could influence investor decision-making.
This level of reporting marks a significant shift for Japan’s market, where tens of thousands of tokens exist globally but only a tightly controlled set of 105 are permitted on domestic exchanges. Under the new system, this approved list would effectively become a regulated product universe.
Insider-Trading Restrictions Extended to Crypto
Another major part of the proposal is to apply the insider-trading rules to digital assets. If passed, individuals or entities with access to non-public information would be barred from trading affected tokens.
The restrictions would apply to issuers, crypto-asset operators and other entities that may know in advance about the material events, such as listings or delistings, major technical or financial incidents.
The same rules are effective for equities. They are designed to prevent information asymmetry in a market where transparency has historically been limited.
However, the push for stricter oversight has sparked debate. During recent Financial Services Council working-group meetings, industry representatives warned that the regulatory burden may be excessive, noting that roughly 90% of domestic exchanges are operating at a loss.
Some committee members described the proposals as “too heavy-handed” and urged the FSA to strike a balance between investor protection and market viability.
This article was written by Tanya Chepkova at www.financemagnates.com.
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