Japan set to revise financial laws, grant legal status to digital assets

The Financial Services Agency (FSA) of Japan has announced plans to revise the Financial Instruments and Exchange Act, labeling crypto assets as financial products and giving them legal status.

According to reports, the commission will also place digital assets under trading restrictions to build investor trust.

Japan wants to clarify digital assets as financial products

According to the FSA, it hopes to build a robust framework for the crypto industry and remove uncertainties among traders. The commission also wants to grant legal status to digital assets, seeing them as financial products. However, it will restrict part of the buying and selling of assets based on undisclosed information to better protect investors.

The agency mentioned that a committee will begin discussing the proposed amendments in the summer of 2025. The report also noted that the agency hopes to have submitted its final amendments to the bill to parliament as early as 2026. While it remains unclear what other amendments will be introduced, this is not the first time the commission has discussed crypto regulatory changes. In September 2024, the Financial Council working group met to discuss possible updates on fewer restrictions for crypto companies and even the allowance of short-term government bonds.

Japan’s LDP wants to reduce tax on crypto gains

Before the FSA made its announcement, LDP Lawmaker Akihisa Shiozaki previously proposed the establishment of a new asset class for digital assets. The lawmaker argued that the assets should no longer be seen as property, suggesting that their regulations be shifted from the Payments Services Act to the Financial Instruments and Exchange Act. He recommended that crypto be classified under “financial products,” subjecting it to regulations similar to securities but with a separate framework.

Meanwhile, the ruling LDP also proposed a reduction in crypto-realized gains to 20%. Startale Group CEO Sota Watanabe even remarked that tax cuts could encourage more people to buy crypto and increase on-chain activity. He believes that the cuts may also set the foundation for Bitcoin ETFs in the nation. So far, crypto transactions in Japan have been subject to a 55% tax rate on realized gains, classified as miscellaneous income.

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