Bitcoin News Today: Japan's 2026 Crypto Overhaul Aims to Cement Web3 Leadership

Japan's Financial Services Agency (FSA) is set to reclassify 105 cryptocurrencies-including Bitcoin (BTC) and Ether (ETH)-as financial products under the Financial Instruments and Exchange Act, a move that could reshape the country's crypto market and investor landscape. The overhaul, first reported by Asahi Shimbun, aims to bring digital assets under stricter regulatory scrutiny while slashing the tax rate on crypto gains from a steep 55% to a flat 20%, aligning it with stock trading rates. The FSA plans to submit the proposed legislation to Japan's parliament in 2026 for approval.

The reclassification will subject the 105 tokens to mandatory disclosures, requiring exchanges to detail each asset's volatility, blockchain technology, and whether it has an identifiable issuer.

This marks the first time Japan will apply insider trading rules to crypto, prohibiting entities with non-public information-such as upcoming listings or issuer financial distress-from trading affected tokens. The FSA also aims to allow banks and insurance firms to sell crypto via their securities subsidiaries, expanding institutional access to digital assets.

The tax overhaul is a significant shift for Japan, which currently treats crypto earnings as "miscellaneous income," subjecting high-earning traders to rates as high as 55%, one of the steepest globally. The 20% flat rate, akin to capital gains taxes on stocks, is expected to incentivize retail and institutional participation, potentially boosting liquidity in the market. The Block noted that the tax cut could also attract Web3 developers to Japan, countering brain drain to crypto-friendly hubs.

The reforms come amid growing interest in crypto's role in Japan's financial system. Last month, the FSA explored allowing banks to hold and trade cryptocurrencies like Bitcoin, a step that could further normalize crypto as an asset class. Meanwhile, companies like Metaplanet, which holds substantial Bitcoin reserves, stand to benefit from the tax relief. Metaplanet's CEO has argued that the firm's Bitcoin accumulation strategy-unlike static ETFs-offers dynamic growth through operational profits, a model that could gain traction under the new framework according to analysis.

Critics, however, caution that the focus on major cryptocurrencies like BTC and ETH may leave smaller tokens and innovative projects in a regulatory gray area. The FSA's criteria for inclusion-based on transparency, stability, and volatility-exclude high-risk or niche assets, potentially stifling innovation outside the 105-token list.

The FSA's 2026 timeline reflects a broader strategy to position Japan as a Web3 hub. Alongside the tax reforms, the agency is advancing a yen-pegged stablecoin initiative, with JPYC set to launch on October 27. These moves signal Japan's intent to balance regulatory rigor with market competitiveness, though challenges remain in harmonizing oversight with global crypto standards.