Crypto regulation in the world weekly digest #162
USA
The Commodity Futures Trading Commission has issued an advisory clarifying that foreign (offshore) cryptocurrency exchanges can legally serve U.S. citizens by registering under the Foreign Board of Trade framework. This framework, established in the 1990s, offers a pathway for non-U.S. exchanges to provide services to U.S. traders, including major exchanges like Binance, which previously had to operate separately for U.S. customers. The advisory aims to remove regulatory ambiguity, allowing crypto firms that had moved overseas due to strict U.S. regulations to have a clear route back into the U.S. market under CFTC oversight. This move is part of the CFTC's broader "crypto sprint" initiative to encourage crypto innovation and market access in the U.S. while maintaining regulatory compliance.
Foreign crypto exchanges can register as FBOTs to serve U.S. customers legally. The registration pathway has existed since the 1990s, but recent enforcement actions created uncertainty. This regulatory shift is part of the CFTC's effort to "onshore" trading activity and boost U.S. crypto market leadership.
Acting CFTC Chair Caroline Pham emphasized the policy as a win for increasing market liquidity and access. This means U.S. citizens will soon have broader access to offshore crypto exchanges operating legally under CFTC rules, potentially expanding their trading options.
Russia
The Russian government is introducing new fines and penalties for illegal cryptocurrency exchange and mining activities starting in 2025. Fines for individuals involved in illegal crypto payments and mining range from 100,000 to 200,000 rubles (approximately $2,500 to $5,000).
Companies face fines between 700,000 and 2 million rubles (around $12,500 to $25,000), depending on the offense. Authorities can confiscate cryptocurrencies involved in illegal transactions and mining. Illegal mining includes unauthorized participation, unreported mining profits, and mining without proper registration.
The government has launched a national system to monitor mining equipment and electricity consumption to curb illegal mining operations. These measures align with existing bans on crypto payments and mining in certain regions, with stricter enforcement expected nationwide. The legislation aims to regulate and assert state control over crypto activities while preventing illegal operations that impact energy resources and tax revenues.
Japan
Japan is poised to introduce a landmark tax reform in 2026 that will reshape the landscape for cryptocurrency investors and the broader digital asset market. The reform, spearheaded by the Financial Services Agency (FSA), aims to significantly reduce the tax burden on crypto gains and introduce regulatory clarity by reclassifying cryptocurrencies as financial products.
Currently, in Japan, cryptocurrency gains are taxed as "miscellaneous income," subject to a progressive tax rate that can reach as high as 55%. This harsh taxation contrasts sharply with the flat 20% tax rate that applies to income from stocks and bonds, making Japan's crypto market less attractive and placing digital assets at a competitive disadvantage compared to traditional investments.
The most transformative part of the reform is the introduction of a flat tax rate of approximately 20% (comprising 15% national income tax, 5% resident tax, and a special reconstruction tax) on cryptocurrency capital gains. This move drastically lowers the maximum tax rate from 55% to around 20%, aligning crypto with the taxation of stocks, thereby making cryptocurrency investment more appealing.
For the first time, crypto investors in Japan will be able to carry forward losses from cryptocurrency trading for up to three years to offset against future gains. This provision, which applies to stocks today, reduces the financial risk for investors and encourages a more strategic approach to trading and investment.
The FSA plans to transition cryptocurrencies from their current classification under the Payment Services Act (as means of payment) to financial products regulated under the Financial Instruments and Exchange Act (FIEA). This legal reclassification will subject cryptocurrencies to securities laws, enabling investor protection rules, insider trading regulations, and disclosure requirements.
This regulatory clarity is expected to boost institutional participation and pave the way for innovative financial products such as cryptocurrency exchange-traded funds (ETFs) and yen-backed stablecoins. Japan’s first yen-backed stablecoin, JPYC, is anticipated to gain approval by fall 2025. We continue to highlight the news of the world of crypto regulation worldwide. Please stay with us!
