[NEWS] Financial Services Agency considers regulating crypto assets as financial products on par with securities, with a view to lifting the ban on ETFs

It has been learned that the Financial Services Agency has begun considering positioning crypto assets (virtual currencies) as financial products on a par with securities. The Nihon Keizai Shimbun reported on the 10th. By treating crypto assets as financial assets, the government is considering lifting the ban on crypto asset ETFs (exchange-traded funds).

Treating crypto assets as financial products also aims to protect investors by requiring businesses to disclose more detailed information. The FSA is currently discussing the current crypto asset regulations through study sessions it is holding with experts.

Based on this study session, the agency plans to announce the direction of the system reform by the end of June and consult with the Financial System Council, which will be held after this fall. After that, based on the council's discussions, the agency aims to submit a bill to amend the relevant laws to the ordinary Diet session in 2026.

Currently, crypto assets are legally positioned as a means of payment as defined by the Payment Services Act. However, there are few cases of using crypto assets as a means of payment, and there has been a growing view that regulations need to be reviewed due to their relatively strong investment and speculative aspects.

According to reports, the FSA is considering increasing disclosure of financial information and other information from cryptocurrency-related businesses, as well as strengthening regulations to require registration for investment advice. By establishing regulations on par with securities, investor protection will be strengthened and the risk of users receiving malicious services will be reduced.

The details of the regulations are to be adjusted in the future. Another point of contention in the formulation of regulations will be whether the regulations should be limited to representative cryptocurrencies such as Bitcoin (BTC) and Ethereum (ETH), or whether they should apply to all cryptocurrencies.

Currently, profits generated from cryptocurrency transactions are classified as miscellaneous income and are subject to a maximum tax of 55%. However, by treating cryptocurrencies as financial products, it is becoming increasingly likely that they will be subject to a 20% separate self-assessment tax.

One of the reasons behind positioning crypto assets as financial products is the need to further strengthen investor protection. The total number of accounts in Japan, as announced by the Japan Virtual Currency Exchange Association (JVCEA), was approximately 11.81 million as of the 7th of this month. While interest in crypto assets is growing worldwide, the number of fraudulent leaks from related services is also increasing, so the government is particularly focusing on investor protection.

At the end of last month, Finance Minister Katsunobu Kato stated in a Diet response that he would "reach a conclusion by the end of June this year" regarding the establishment of regulations, including a tax system for crypto assets. Prime Minister Shigeru Ishiba also emphasized the importance of ensuring user protection and improving the environment in a similar response.

Reference: Press
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