Japan’s Financial Services Agency (FSA) is working on a regulatory reform that would completely change the way the country supervises crypto assets. The plan contemplates reclassifying 105 cryptocurrencies listed on national exchanges – including bitcoin (BTC) and ether (ETH) – as financial products under the Financial Instruments and Stock Exchange Law.
This change would imply that the tokens are subject to obligations similar to those of traditional sharesreinforcing surveillance of the sector and raising the requirements that exchanges must meet. For the first time, the regulations would also include explicit regulations against insider trading in the Japanese cryptocurrency market, according to information published by the Asahi Shimbun.
The proposal would require local platforms to publish technical and operational data on each of the approved assets. This would cover whether the token has an identifiable issuer, the network it operates on, its volatility history, and potential associated risks. The FSA’s aim is to prevent listings with insufficient information and raise transparency standards to protect retail investors.
Tax reform: end to the tax of up to 55%
In parallel, the agency is promoting significant tax reform. Currently, earnings from cryptocurrencies are classified as “miscellaneous income.” This can raise the tax burden to more than 55% for those in the highest brackets.
With the new scheme, the 105 approved cryptocurrencies would be taxed with a flat tax of 20%. This is the same percentage applied to capital gains in the stock market. The measure aims to stop investor flight and align tax treatment with more competitive international standards.
Another central axis of the proposal is the prohibition of operating with tokens when there is relevant non-public information, such as pending listing dates, scheduled delistings or financial problems of a project. If implemented, Japan would become one of the few countries with clear and specific regulation on insider trading in crypto assets.
The FSA has not published the final list of the 105 tokens. However, the selection could be inspired by criteria similar to those of the “green list” of the Japanese Virtual Asset and Cryptoasset Exchange Association. (JVCEA, for its acronym in English). It is made up of 30 coins considered reliable due to their history of compliance, stability and wide adoption on national exchanges.