Japan to Classify Crypto as Financial Products, Sets Insider Trading Rules
Japan Prepares to Redefine Crypto as Financial Products
Japan’s Financial Services Agency is preparing a sweeping overhaul of the country’s crypto regulatory structure, setting the stage for one of the most comprehensive frameworks among major economies. According to a report from Asahi Shimbun, the agency plans to reclassify digital assets as financial products under the Financial Instruments and platform Act, pulling cryptocurrencies into the identical legal category as securities and structured investment vehicles.
If approved, the move would dramatically reshape how Japanese platforms, issuers and investors interact with the country’s crypto ecosystem. The new classification would apply to the 105 cryptocurrencies that domestic trading platforms are authorized to list, including major assets such as BTC and Ether.
Under the proposal, platforms would be required to disclose detailed material information about every listed token. That includes whether a token has an identifiable issuer, the underlying blockchain architecture, and the asset’s volatility profile. For the first time, these tokens would also fall under Japan’s rules, bringing crypto into a regulatory structure normally reserved for equities and derivatives.
The FSA intends to present the reforms to Japan’s main parliamentary meeting in 2026, giving the country two years to refine, debate and finalize what could become one of the most influential crypto frameworks in Asia.
Investor Takeaway
How Japan’s Proposed 20% Tax Could Reshape Trading Behavior
Alongside new disclosure requirements, Japan is considering one of the largegest tax changes in its crypto history. Currently, crypto earnings fall under “miscellaneous income,” a category that can push high-earning traders into tax brackets as high as 55 percent — one of the steepest tax regimes for anywhere in the world.
The FSA now wants gains on the 105 approved cryptocurrencies to be taxed like equities: a flat 20 percent capital gains rate.
For active traders and long-term investors, the impact would be immediate and substantial. A flat tax would remove one of the largest deterrents to high-volume liquidity in a market that has sluggished under heavy fiscal pressure. It would also align Japan more closely with other crypto-forward markets such as Singapore and parts of Europe, where capital gains frameworks are simpler and more predictable.
Another critical element in the proposal is the crackdown on insider trading. Under the plan, individuals or companies with access to non-public platform information — such as listings, delistings, issuer distress or internal risk assessments — would be barred from trading affected tokens. platforms, advisory firms and wallet providers would need new compliance structures to avoid violations.
Japan Weighs Letting Banks Hold BTC and Operate platforms
The FSA’s regulatory expansion does not end with taxation and disclosures. The agency is also exploring whether Japanese banks should be allowed to acquire and hold for investment purposes. Under current rules, banks are heavily restricted from holding volatile assets on their balance sheets, a policy that reflects long-standing fears of price instability.
But regulators now appear open to revisiting that stance. The FSA reportedly plans to discuss whether banks should be allowed to directly and whether banking groups should be permitted to register as licensed cryptocurrency platforms.
If adopted, this would mark one of the largegest financial-institution shifts in the global digital-asset landscape. Few major economies currently allow commercial banks to hold crypto directly, let alone operate platform businesses under a unified regulatory umbrella.
For Japanese institutions, the move could unlock a broad menu of services: consumer-facing crypto trading, institutional custody, BTC-based investment products and direct treasury .
Investor Takeaway
What the Global Market Should Watch Next
Japan has been a first mover in crypto regulation for over a decade. It licensed platforms long before most countries even had official categories for them, and it implemented strict custody rules following the Mt. Gox collapse. The potential 2026 framework continues that pattern, aiming to harden the market against manipulation, improve transparency and build an institutional entry ramp.
The global industry will be watching three developments closely:
1. How the financial-product classification influences token listing standards.
2. Whether the 20 percent tax accelerates local trading volume.
3. Whether banks ultimately receive permission to hold BTC on their balance sheets.
If Japan moves forward on all three fronts, the country could emerge as one of the most structurally mature crypto markets in the world — and a model for other G7 regulators navigating how to integrate into mainstream finance.
