Japan's Financial Services Agency considers changing the classification of cryptocurrencies to financial assets that can be invested by the public

The classification of cryptocurrencies may be changing after Japan’s Financial Services Agency announced plans to start treating cryptocurrencies like Bitcoin as “financial assets.” The official document shows that the FSA has unveiled its position in its fiscal 2025 tax reform request, hoping to start treating crypto assets as “financial assets that the general public can invest in.” Currently, Japanese law classifies crypto assets as “payment instruments” under the terms of the Payment Services Act. A shift to a definition that focuses more on “investment” would represent some kind of legalization of cryptocurrencies, but such a change would appear to depend on the stability of the cryptocurrency industry. While the document does not call for crypto tax reform, CoinPost writes that it suggests that Japan’s controversial crypto tax rules are “likely” to be “reviewed.” A few days ago, the ruling Liberal Democratic Party (LDP) made a similar claim in its fiscal 2025 tax policy proposal. The LDP wants the cryptocurrency industry to be included in “accountability and investor protection regulations,” equivalent to regulations for investments in listed company stocks. This would allow the law to begin treating “certain crypto assets” as “financial products” commonly used in “public portfolios.”