Japan's Financial Services Agency (FSA) is set to propose a significant reform in cryptocurrency taxation as part of its 2026 tax revision plan. The proposal aims to shift cryptocurrency gains from the current "miscellaneous income" category, which can be taxed at rates exceeding 50%, to a flat 20% tax rate, aligning it with the taxation of stocks and bonds. This move is part of a broader reform package that also seeks to reclassify cryptocurrencies as financial products, thereby subjecting them to insider trading rules and investor protections under the Financial Instruments and Exchange Act. The proposed reforms are expected to be accompanied by stricter regulations and the potential introduction of cryptocurrency-linked ETFs. By reclassifying cryptocurrencies, the FSA intends to enhance market transparency and investor protection, aligning the treatment of digital assets with traditional financial instruments. These changes reflect Japan's ongoing efforts to integrate cryptocurrencies into its financial system while ensuring robust regulatory oversight.