Japan is moving toward a landmark overhaul of its cryptocurrency regulations, aiming to reclassify digital assets as financial products subject to strict insider trading laws while significantly lowering the tax burden on investment profits, the Asahi newspaper reported Sunday.
The Financial Services Agency (FSA) is drafting legislation that would apply a flat 20% tax rate on crypto gains, matching the rate for stock trading and drastically reducing the current top rate of 55%. This move is intended to draw trading activity back to domestic, regulated platforms.
Under the proposed changes, market conduct rules similar to those in equity trading would be imposed. The FSA plans to bar individuals with non-public information from trading on material events related to an asset’s issuer or exchange, such as listings, delistings, or bankruptcies, before public disclosure.
The new rulebook will cover 105 cryptocurrencies currently listed in Japan, including Bitcoin and Ethereum. It would also mandate that exchanges disclose core facts for each asset, including the underlying technology, the existence of an issuer, and the risk of price swings, in a push for greater investor confidence.
Furthermore, the reform would broaden distribution, allowing banks and insurers to sell cryptocurrencies to clients through their securities subsidiaries, providing retail investors with access via established financial channels.
The FSA reportedly aims to submit the legislation during next year’s ordinary parliamentary session.
