Japan will transition its crypto regulation from the Payment Services Act to the Financial Instruments and Exchange Act by 2026, recognizing digital assets as investment products. This regulatory shift will introduce stricter Initial Exchange Offering (IEO) disclosure requirements and enhance enforcement against unregistered platforms. Additionally, the reform will reduce the capital gains tax on crypto from 55% to 20%, aligning with global standards such as the EU's MiCA framework. The Financial Services Agency (FSA) aims to bolster investor protection amid increasing crypto adoption.