Japan to classify 105 virtual assets as financial products…also pushing for tax rate cuts

The Financial Services Agency of Japan is reported to have finalized a plan to reclassify virtual assets as financial products and to substantially overhaul related tax measures.

On the 17th (local time), The Block reported that the Financial Services Agency has prepared a plan to include 105 virtual assets, including Bitcoin (BTC) and Ethereum (ETH), under the scope of the Financial Instruments and Exchange Act. Exchanges handling those assets will be required to disclose key information such as whether an issuer exists, the underlying blockchain technology, and price volatility.

The agency also plans to introduce insider trading prevention regulations. Measures to restrict trading based on non-public information by issuing company executives or exchange personnel are being considered. The related amendment bill is expected to be discussed at the 2026 regular Diet session.

Tax reform will be carried out in parallel. The Japanese government is considering reducing the virtual asset income tax rate, currently as high as 55%, to around 20%, the same level as stock investment income. The reform plan is expected to be addressed during the next fiscal year's tax deliberations.

Japan had been conservative in virtual asset regulation since the Mount Gox bankruptcy, but has recently been actively promoting a Web3 transition across the financial system. Last month, the Financial Services Agency was reported to be considering allowing banks to trade virtual assets directly, and it is also pursuing policies to foster yen-pegged stablecoins. JPYC was officially issued on October 27 as the first local stablecoin.