The FSA, Japan’s regulator, is planning to cut tax on a selection of approved cryptocurrencies to 20 per cent and also reclassify them as financial products – a shift that could make Japan one of Asia’s most competitive regulated crypto markets.
Japan is currently preparing one of its most significant overhauls of crypto regulation to date, combining tax relief for investors with stricter rules of how digital assets are issued and traded.
According to proposals finalised by the Financial Services Agency (FSA), gains on a selection of 105 approved cryptocurrencies is proposed to be taxed at a flat 20 per cent from 2026, the same rate applied to share trading. This would replace the current regime, where profits from crypto trading are treated as miscellaneous income and can be taxed at rates as high as 55 per cent.
The step is designed to encourage domestic trading and discourage capital from moving offshore. In recent years, high taxes had pushed active traders to foreign platforms.
Crypto To Be Treated As Financial Products
However, the tax cut comes with a catch. The FSA also plans to reclassify certain crypto assets as “financial products” under Japan’s Financial Instruments and Exchange Act (FIEA).
This would bring tokens into the same legal framework as traditional securities, with mandatory disclosure rules, insider-trading provisions and stricter supervision of issuers and exchanges. The 105 eligible tokens would be subject to more detailed documentation on technology, risks, governance and liquidity.
Pressure On Regional Rivals
Japan’s planned 20 per cent flat rate has already caught attention elsewhere in Asia, as it sets a new benchmark for retail-friendly crypto tax policy and could put pressure on centres such as Singapore and Hong Kong, where effective tax treatment and regulatory costs differ.
If the package passes, Japan could become one of the most competitive regulated markets for crypto trading in the region, particularly for sophisticated retail and domestic institutions.
What it Means for Japanese Traders
For Japanese traders, the reforms could mean:
- Lower and more predictable tax bills
- Clearer rules on which tokens qualify as regulated financial products
- A safer, but more selective, trading environment
For global crypto firms, Japan’s approach offers a template that blends investor protection with market growth, rather than choosing one over the other.
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