Japan’s Financial Services Agency (FSA) is working on regulatory reforms that will completely change the way the country supervises crypto assets. The plan considers reclassifying 105 virtual currencies, including Bitcoin (BTC) and Ether (ETH), listed on exchanges around the world as financial instruments under the Financial Instruments and Exchange Act.
This change means that tokens will have obligations similar to traditional stocks.strengthening oversight of the sector and raising the requirements that exchanges must meet. According to information published by Asahi Shimbun, for the first time, the regulation will also include clear regulations on insider trading in Japan’s virtual currency market.
The proposal would require local platforms to publish technical and operational data about each approved asset. This includes whether the token has an identifiable issuer, the network on which the token operates, its volatility history, and any potential associated risks. The Financial Services Agency’s objective is to prevent listings with insufficient information and raise transparency standards in order to protect individual investors.
Tax reform: abolish up to 55% tax
At the same time, the agency is promoting major tax reform. Currently, income from virtual currencies is classified as “miscellaneous income.” This could raise the tax burden for those in the highest brackets to more than 55%.
Under the new system, a flat tax of 20% will be levied on 105 approved cryptocurrencies. This is the same percentage that applies to stock market capital gains. The measures are aimed at deterring investors from fleeing the country and aligning tax treatment with more competitive international standards.
Another centerpiece of the proposal is a ban on operations with tokens where there is relevant non-public information, such as a pending listing date, a planned delisting, or a project’s financial problems. If enacted, Japan will be one of the few countries with clear and specific regulations on insider trading of crypto assets.
FSA has not published the final list of 105 tokens. However, this selection may be made based on criteria similar to the Japan Virtual Assets and Cryptoassets Exchange Association’s “Green List”. (JVCEA, English acronym). It consists of 30 coins that are considered trustworthy due to their history of compliance, stability, and widespread adoption on national exchanges.