Japan FSA Reclassify BTC as Financial Product, Eyes 20% Crypto Tax

Japan FSA 2026 Plan Sets 20% Crypto Tax & BTC Added as Financial Asset

Japan is preparing for a major shift in crypto regulation as the Financial Services Agency (FSA) plans to reclassify 105 cryptoassets—including Bitcoin (BTC) and Ethereum (ETH)—as financial products. The move could usher in long-awaited Crypto Tax reforms and stricter insider trading rules as early as fiscal year 2026

FSA Pushes for 2026 Tax Overhaul

According to a report from the Asahi Shimbun, the financial service agency intends to place leading cryptocurrencies under the Financial Products Transaction Act, the same framework that governs securities and derivatives.

If approved, the plan aims to replace Japan’s progressive crypto tax rate, which currently reaches up to 55%, with a flat 20% capital gains tax—similar to stock trading.

The agency is expected to formally present these requests during the government’s 2026 budget discussions.

Why This Matters for Japanese Crypto Traders?

Currently, cryptocurrency-related earnings must be reported as “miscellaneous income,” pushing many traders—especially high-volume investors—into the highest tax bracket. Critics have long argued that the system discourages domestic cryptocurrency activity and pushes trading volume offshore.

Under the proposed changes:

• Gains from the 105 approved tokens would be subject to a uniform 20% tax rate

• Crypto would gain parity with equities in Japan

• Traders would no longer face extreme tax burdens during bull markets

Although the FSA has not issued an official statement, the report suggests that Japan is aligning its regulations with global standards while seeking to support innovation at home.

Source: Wu Blockchain X

How were the 105 ‘Approved’ Coins Selected?

The FSA reportedly evaluated cryptocurrencies using several criteria, including:

• Transparency of project operations

• Financial stability and credibility of issuers

• Soundness of underlying technologies

• Risk level associated with price volatility

• Bitcoin and Ethereum are included, along with a wide range of large-cap tokens.

Japan’s self-regulatory body, the Japan Virtual Currency Exchange Association (JVCEA), already maintains a “green list” of 30 reliable tokens such as BTC, ETH, MATIC, XRP, and LTC.

To qualify, a token must:

• Be ranked in at least three JVCEA member exchanges.

• Have a minimum of six months of listing on one of the member exchanges.

• Be qualified to be listed unconditionally.

• The FSA list is broader, implying that there is a massive growth beyond the JVCEA framework.

Insider Trading Restrictions Also Planned

Besides taxation changes, the FSA is considering a set of tougher insider trading regulations on the crypto industry.

The proposed rules would bar individuals and entities affiliated with issuers or exchanges from trading tokens while possessing key undisclosed information—such as upcoming listings or financial data.

The goal is to increase market fairness and reduce manipulation risks as crypto becomes more integrated into Japan financial system.

What Comes Next?

While the FSA has not issued an official statement, industry expectations are high. In case the reforms are implemented as expected, Japan will be able to enter 2026 with a more balanced regulatory framework- enhancing transparency, decreasing pressure, and increasing confidence in the crypto market in the long term.