Japan’s government appears ready to make its most decisive move yet toward integrating cryptocurrency into its traditional financial system. According to reports from Asahi Shimbun and other local outlets, the Financial Services Agency (FSA) is drafting a landmark policy that would reclassify Bitcoin, Ethereum, and roughly 103 other tokens as financial products under the Financial Instruments and Exchange Act (FIEA).
The move would effectively pull crypto assets out of their current gray zone and place them on the same regulatory footing as stocks and bonds. This would make Japan one of the first G7 countries to apply full securities-style oversight to digital assets. This could be a big change for both domestic and international investors.
FSA aims to curb high taxes and align crypto with traditional finance
Currently, Japan taxes cryptocurrency gains as miscellaneous income, a system that can saddle traders in the top income bracket with up to 55% in taxes on profits. The FSA intends to change that by applying a flat 20% tax rate, similar to that used for capital gains on equities.
“The FSA will also ask the government to enforce tax rate reductions ahead of the next financial year,” Asahi reported, citing plans to align crypto taxation with the conventional financial framework.
If approved, the reform would eliminate one of Japan’s biggest barriers to crypto participation. It could allow retail traders, high-net-worth individuals, and corporate treasuries to view Bitcoin and other digital assets as viable, domestically held investments.
Binance Co-Founder Changpeng Zhao (CZ) praised Japan’s tax plan shortly after the news surfaced, writing on X, “Lower fees = more economic growth.” His comments reflect a widespread belief that streamlined taxation could attract both retail and institutional capital back into Japanese exchanges that have seen users migrate offshore in search of friendlier conditions.
Great step for Japan. 👏
— CZ 🔶 BNB (@cz_binance) November 17, 2025
Lower "fees" = more economic growth. pic.twitter.com/aPU7P5i98k
105 coins to be screened for stability, transparency, and issuer quality
According to Asahi, the FSA’s proposed whitelist of approximately 105 cryptocurrencies was developed using a strict vetting process. Inclusion reportedly depends on transparency, issuer reputation, technical resilience, market stability, and low volatility risk.
No memecoins made the list. Instead, the focus is on established networks such as Bitcoin (BTC), Ethereum (ETH), XRP (XRP), Litecoin (LTC), and Polygon (MATIC), all of which already appear on the Japan Virtual Currency Exchange Association (JVCEA)’s “green list.”
The JVCEA, a self-regulatory body recognized by Japanese authorities, plays a pivotal role in determining which tokens qualify for unrestricted exchange listings. To enter the green list, tokens must either be listed by three approved Japanese exchanges or remain listed by one for at least six months while demonstrating market stability. The JVCEA must then approve the token as “appropriate” for unconditional listing.
Insider trading regulations on the horizon
Tax parity isn’t the only reform the FSA intends to introduce. In line with its broader financial oversight responsibilities, the agency is reportedly drafting insider trading prohibitions for digital assets. The proposed rules would outlaw any trades made by individuals or firms possessing “important facts” about a token that are not yet public, such as pending exchange listings or undisclosed updates from issuers.
This brings crypto more in line with how regulated securities are managed globally. Exchanges and issuers would likely need to enhance their disclosure practices, mirroring how listed companies report financial events to markets under Japan’s traditional finance laws.
A pro-innovation shift for Asia’s crypto landscape
Japan’s crypto policy overhaul signals a wider strategic pivot. After years of caution following scandals like Mt. Gox and Coincheck, the government now appears intent on making Japan a hub for compliant digital asset innovation.
Since former Prime Minister Shigeru Ishiba, Japan has viewed cryptocurrencies as a potential lever for economic revitalization. Sanae Takaichi, the current Prime Minister, has kept this view and stressed the need to support new technologies as a way to make Japan's economy more competitive in the future.
If the reforms pass, Japan will emerge as the most pro-crypto G7 economy, offering a path for banks, insurers, and corporations to engage with blockchain assets within a familiar compliance structure.
The combination of reduced taxes, clear disclosure standards, and institutional-grade oversight could transform the country into one of the world’s leading jurisdictions for regulated crypto investment.
Japan's FSA seems ready to close the gap between crypto and traditional finance by aligning policy, taxes, and market infrastructure. This will solidify Japan's position as a regional leader in shaping the next phase of global digital asset regulation.
Oleksii Shumak
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