Japan is ready to classify cryptocurrencies as financial products under the Financial Instruments and Foreign Exchange Act (FIEA). Furthermore, it also plans to introduce a new tax regime for this sector as part of its crypto reform process.
According to a report published by a local media outlet, the Japan Financial Services Agency (FSA) wants to reclassify 105 cryptocurrencies, including Bitcoin (BTC) and Ethereum (ETH), under the FIEA, thereby placing crypto under the same umbrella as stocks and bonds.
This extension of the regulatory framework to crypto aims to ensure that the sector falls under investor protection rules and is held to higher standards.
JUST IN:
Japan’s FSA plans to classify crypto as a financial product and reduce the tax rate from 55% to 20%. pic.twitter.com/MRUfrjLMYI
– Whale Insider (@WhaleInsider) November 17, 2025
Japan’s FSA plans to classify crypto as a financial product and reduce the tax rate from 55% to 20%. Under the proposed rules, cryptocurrencies like BTC and ETH, listed on domestic exchanges, will have to follow strict protocols regarding disclosure agreements. Japanese exchanges must clearly disclose each token’s issuer, blockchain infrastructure, and historical price volatility.
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Japan’s crypto tax cut is a “big step,” says CZ
Since the news broke, Binance co-founder Changpeng Zhao, known as CZ in the crypto world, has welcomed Japan’s tax cut. In an article on X, he said: “Lower fees = more economic growth.”
His support is important. As one of the most influential voices in the crypto community, his support means that Japan has likely become an attractive destination for crypto investors to park their funds.
A big step for Japan.
Lower "costs" = more economic growth. pic.twitter.com/aPU7P5i98k
—CZ
BNB (@cz_binance) Additionally, its support will likely encourage more people and businesses to invest in the growing Japanese crypto market.
Japan’s interest in crypto began to gain traction under former Prime Minister Shigeru Ishiba, who saw digital currencies as a means by which Japan could address its long-standing economic challenges.
New Prime Minister Sanae Takaichi supports new technologies and plans to continue guiding Japan towards crypto adoption.
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Japan crypto reform: FSA pushes for 20% flat tax rate, on par with TradFi
Japan was an early adopter of crypto and, by extension, its regulations, and in recent years, major regulatory advancements have been made in the country regarding crypto.
Meanwhile, the country’s tax regime has remained more rigid than ever, a glaring chink in its armor that has at times stifled participation by retailers and institutions. And as the country wants to integrate crypto into its broader financial ecosystem, the lack of a friendlier tax regime is doing it more harm than good.
Currently, cryptocurrencies in Japan are classified as miscellaneous income, which often becomes a source of concern for wealthy individuals who then have to pay around 55% of their income in taxes. This tax rate, intended for crypto investors, is one of the highest in the world.
The Financial Services Agency indicated that 105 cryptocurrencies would be "priority" for future regulation as “financial products” under the Financial Instruments and Foreign Exchange Act.
And among these 105 alongside $BTC, $ETHAnd $XRP… pic.twitter.com/25JME0YVKX
– EmanuCt_96 (@EmanuCt96) November 16, 2025
Fortunately, some respite is in sight as the FSA is pushing for a flat 20% tax rate on crypto gains, putting it on par with traditional financial instruments such as stocks and bonds. This idea first emerged in June last year when the FSA released a document calling for a change in the way crypto is regulated in the country.
Additionally, the FSA wants to crack down on insider trading, banning transactions based on private information and introducing penalties for those who break the rules.
In the meantime, regulators will prepare the proposal for the Japanese parliament to debate in 2026.
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Key takeaways
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Japan is considering reclassifying cryptocurrencies as financial products under stricter investor protection rules.
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The proposed cryptocurrency tax reform aims to replace Japan’s 55% income tax with a flat rate of 20% on capital gains.
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Binance co-founder CZ has endorsed Japan’s cryptocurrency tax cut, calling it a “big step for Japan.”
The article Japan FSA Proposes Flat Crypto Tax of 20%, Removing ‘Miscellaneous Income’ Category by 55% appeared first on 99Bitcoins.
