Japan’s Financial Services Agency may reclassify Bitcoin and other cryptocurrencies as financial products, putting them on par with stocks and bonds. The move is expected to also lower the tax rate on profits from cryptocurrency investments.
Japan has seen an increase in use of digital currencies with more than 13 million accounts registered in the country.
Cryptocurrency trading is currently regarded as a financial transaction, but the agency says the virtual currencies are increasingly used as investments so a reclassification is needed.
This will make digital currencies subject to insider trading rules and will require fuller information disclosure from issuers.
The agency plans to submit a draft bill to the Diet next year to revise the law.
The reclassification may also affect tax rules.
Currently, capital gains taxes on crypto can reach as high as 55 percent depending on income. The government may change this to a flat 20 percent and aims to introduce the revision in fiscal 2026.