Japan’s Financial Services Agency (FSA) is preparing a significant update to its financial laws, which they plan to implement by 2026. The agency wants to reclassify cryptocurrencies as financial products rather than having them as digital assets. The new rules would bring cryptos under the same legal framework as stocks and bonds.
According to the economist.com, the FSA held expert consultations and had kept an ope channel for public feedback until May 2025. Now, it will collate all that data and submit the finalized bill to the Diet (Japan’s parliament) in early 2026.
Among the proposed changes are revisions to the Financial Instruments and Exchange Act (FIEA). The Act will introduce insider trading restrictions, require improved disclosures, and apply stricter oversight to crypto firms. Typically, it would give investors measures to deal with cryptocurrencies similar to those applied to traditional financial markets.
This move is in line with Japan’s broader crypto reforms, like the proposal by the ruling Liberal Democratic Party to cut crypto capital gains tax from up to 55% to a flat 20%. At 55% Japanese residents face one of the highest crypto tax rates in the world. The FSA proposes to replace this with a 20% capital gains tax, similar to how traditional stock and ETF investments are taxed in the country.
Another key by-product of these changes could be the introduction of Bitcoin and Ethereum spot ETFs, offering a compliant investment vehicle within Japan’s regulated market. By classifying cryptocurrencies as financial instruments, Japan could now allow regulated crypto ETFs, making it possible for pensions, banks, and traditional investors to include digital assets in their investment portfolios.