Japanese crypto tax relief in sight as regulator set to classify Bitcoin as ‘financial product’

Core Insights - Japan's Financial Services Agency (FSA) plans to reclassify 105 cryptoassets, including Bitcoin and Ethereum, as financial products, subjecting them to regulation under the Financial Products Transaction Act [1] - The FSA is advocating for tax rate reductions for crypto traders, proposing a shift from the current 55% tax on miscellaneous income to a flat 20% capital gains tax for these assets [2][3] - New insider trading regulations are being proposed, aiming to prevent individuals and companies with connections to issuers or exchanges from trading based on undisclosed information [5] Regulatory Changes - The FSA intends to classify 105 specific cryptoassets as financial products, which will enhance regulatory oversight [1] - The agency is seeking to implement tax reforms that would align crypto taxation with capital gains tax rates, significantly lowering the tax burden for traders [2][3] - The FSA's criteria for selecting the 105 coins include project transparency, issuer reputation, technology soundness, and price fluctuation risks [4] Insider Trading Regulations - New restrictions on insider trading are being proposed, which would prohibit trading by individuals or companies with insider knowledge of important facts related to crypto assets [5] - The FSA aims to include these new regulations in the upcoming budget discussions scheduled for early 2026 [6] Trustworthy Tokens - The Japan Virtual Currency Exchange Association (JVCEA) maintains a "green list" of trustworthy tokens, currently comprising 30 coins, including BTC and ETH [6] - To qualify for the green list, coins must meet specific criteria, such as being listed by multiple JVCEA exchange members and having a minimum listing duration [7]