Japan is planning the largest policy update in the digital asset sector in the past decade. The country’s Financial Services Agency (FSA) is preparing to revise the legal status of Bitcoin, Ether, and more than a hundred other assets.
The reform, which is set to take effect at the beginning of 2026, may change the tax regime, enhance investor protection, and bring the market closer to traditional financial standards.
A flat 20% rate will replace tax up to 55%
The main change concerns the taxation regime. Currently, profits from cryptocurrency operations are taxed on a progressive scale and in some cases can exceed 55%. The new model proposes a flat rate of 20%—the same as is applied to stock transactions.
In fact, the FSA aims to remove one of the key barriers that has hindered the growth of retail and institutional investor activity. For the Japanese market, this could become a catalyst for a significant increase in liquidity and the attraction of new participants.
Japan will introduce insider trading rules for crypto for the first time
Another important direction is the regulation of trading using non-public information. Until now, the sector has remained outside the scope of market manipulation legislation, and suspicious operations were not under strict control. The FSA proposal provides for the expansion of the powers of the Securities and Exchange Surveillance Commission (SESC). The body will be able to:
- investigate transactions with signs of insider trading
- impose fines
- restrict access to trading for developers, exchanges, and project partners
This decision will bring the crypto market closer to the legal standards of the stock market. For the first time, companies and individuals working with digital assets will be subject to the same requirements as issuers and traders of securities.
Reclassification of 105 assets will change the entire legal regime
The new policy moves cryptocurrencies from the “payment assets” zone, which existed under the Payment Services Act, to the category of financial products. This transition under the Financial Instruments and Exchange Act (FIEA) provides:
- expanded investor protection measures
- a clear regulatory framework for asset circulation
- easier access for financial companies
- the introduction of a clearer status for applications and services working with digital assets
Bitcoin, Ether, and about 105 other projects will effectively fall under the same legal structure as traditional financial instruments.
Important context: Bitcoin declines, Ether shows mixed dynamics
The news came amid a noticeable decline in the price of Bitcoin, reflecting global uncertainty and reduced liquidity. Ether is moving less synchronously: it is influenced by macro signals and expectations for upcoming US economic data.
Despite market fluctuations, Japanese regulators are demonstrating a desire to strengthen the institutional foundation of the industry—and to make digital assets more predictable from a legal regime perspective.
What will change for the market in 2026
If the reform is approved on schedule, the law will create one of the most structured and investor-oriented cryptocurrency environments in Asia.
The changes may lead to:
- increased participation of retail investors due to lower tax burden
- greater market transparency thanks to anti-insider trading rules
- redistribution of capital within the ecosystem
- integration of cryptocurrencies into traditional financial operations
Japan, which was one of the first in the world to introduce digital asset regulation back in the mid-2010s, is once again taking a step forward—this time toward deep institutionalization.
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