Japan to Reclassify 105 Cryptos as Financial Products in 2026

Japan's Financial Services Agency is set to propose sweeping reforms to its cryptocurrency regulations in 2026, reclassifying 105 digital assets, including Bitcoin and Ethereum, as financial products under the Financial Instruments and Exchange Act. The changes, aimed at enhancing transparency and investor protections, would impose stricter disclosure requirements on exchanges and reduce taxes on profits from a maximum of 55 percent to a flat 20 percent rate, aligning treatment with traditional stock trading.

The overhaul represents the most significant update to Japan's crypto framework in over five years, addressing longstanding concerns about market integrity and retail investor risks. Under current rules, cryptocurrency gains are categorized as miscellaneous income, subjecting them to progressive tax rates that can climb as high as 55 percent when combining national and local levies. This has deterred many domestic investors, contributing to Japan's conservative stance on digital assets following high-profile exchange failures and significant retail losses in the past.

If approved during the ordinary Diet session in 2026, the reforms would take effect as early as April of...