Japan's Big Crypto Makeover: What's Changing and Why It Matters

Stricter Rules and Transparency

Japan's Financial Services Agency (FSA) is proposing to reclassify digital currencies as "financial products", bringing them under stricter regulations akin to stocks and bonds.

• Current Treatment: Crypto is treated differently.
• New Proposal: Exchanges must share more details about the 105 cryptocurrencies they list, including:
• Technology behind them
• Volatility levels
• Goal: Enhance transparency to protect investors.

Tax Reform to Boost Crypto Investing

The FSA aims to lower taxes on crypto gains:

• Current Rate: Up to 55% for high earners (one of the highest globally).
• Proposed Rate: A flat 20%, similar to stocks.
• Impact: Could make crypto investing more attractive.

Cracking Down on Insider Trading

The FSA is focusing on preventing insider trading:

• Target: Stop using non-public information for profits.
• Examples: Tips about upcoming listings or financial troubles.
• Objective: Level the playing field for all investors.

Banks Entering the Crypto Arena

The FSA is considering allowing banks to hold digital assets like Bitcoin:

• Current Situation: Banks stay away due to volatility concerns.
• Potential Change: Banks could offer crypto services directly to customers.

Modernizing Japan's Financial System

These changes are part of a broader push to modernize Japan's financial system:

• Timeline: Proposals to be presented in 2026.
• Impact: If approved, these changes could significantly reshape Japan's crypto landscape.