Japan Eyes Crypto Tax Cuts and Insider Trading Rules in Regulatory Overhaul

Economic

Cryptocurrency

Summary:

Japan’s Financial Services Agency is reportedly planning major reforms to crypto regulation, including reclassifying cryptocurrencies as financial products subject to insider trading laws and cutting the tax on crypto gains to 20%...

A strategic shift in Japan’s crypto policy

According to The Asahi Shimbun, Japan’s Financial Services Agency (FSA) is preparing a landmark regulatory reform that could redefine the country’s crypto landscape. The proposed changes would classify cryptocurrencies such as Bitcoin and Ethereum as formal financial products, extending traditional financial oversight mechanisms including insider trading regulations into the digital asset space.

This reclassification could bring a higher level of transparency and investor protection to Japan’s crypto markets, aligning them more closely with securities regulations applied to stocks and bonds.

Lower crypto tax rate to stimulate domestic participation

One of the most significant reforms under consideration is a dramatic reduction in the tax rate on crypto gains. Currently, profits from cryptocurrency transactions can be taxed at rates up to 55% depending on income brackets. Under the new proposal, these would be standardized at a flat 20% rate, the same as capital gains on equities.

This move is likely aimed at encouraging greater domestic participation in the digital asset market by aligning crypto with traditional investment vehicles, removing a long-standing barrier to broader adoption among retail and institutional investors.

Banks and insurers may enter the crypto space

In another bold step, the FSA is reportedly planning to allow banks and insurance companies to offer crypto-related products directly to their customers. Through their securities arms, these institutions would be able to sell crypto assets to depositors and insurance policyholders potentially mainstreaming access to digital assets across Japan’s financial system.

This integration could significantly expand the crypto user base in Japan and accelerate institutional adoption, particularly if supported by clearer risk disclosures and standardized frameworks for pricing volatility.

Disclosure and transparency requirements expanded

Alongside these changes, crypto exchange service providers would face stricter requirements to disclose risks associated with price volatility. This aligns with the broader global push for enhanced transparency in crypto trading and investment platforms, especially in light of recent high-profile exchange failures and fraud scandals worldwide.

By mandating more detailed risk reporting, the FSA aims to equip investors with better tools to evaluate their exposure, potentially improving trust in Japanese crypto markets.

Timing and political outlook

The FSA intends to propose the necessary legislation during Japan’s next ordinary parliamentary session in 2026. While not yet formally confirmed by the agency, the report suggests that these changes could be a cornerstone of Japan’s strategy to remain a leading, innovation-friendly, yet regulated crypto hub in Asia, especially as rivals like Singapore and South Korea refine their own regulatory approaches.

Japan’s proposed crypto reforms represent a comprehensive strategy to legitimize and normalize digital asset trading within its financial system. By aligning tax policies with equity trading, introducing stronger regulatory oversight, and integrating crypto into mainstream banking and insurance channels, the country is positioning itself at the forefront of regulated crypto innovation. If passed, these measures could have ripple effects across Asia’s regulatory landscape and possibly spark a more investor-friendly phase of global crypto adoption.

Source: Reuters

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Gerik

Economic

Cryptocurrency

From all-time high to annual loss in just over a month

In a dramatic reversal, Bitcoin has dropped below $95,000, effectively erasing its gains for 2025 after briefly reaching a record high of $126,251 on October 6. Triggered by a series of shock tariff announcements by President Donald Trump and broader risk aversion in financial markets, the flagship cryptocurrency is now trading below the levels it held at the end of 2024.

As of early Monday morning in Singapore, Bitcoin had pared some of its losses, hovering near $94,869, but remains firmly in bear market territory.

Market sentiment flips as institutional buyers pull back

Institutional investors once the driving force behind Bitcoin’s 2025 rally are now stepping away. ETF inflows, which had once added over $25 billion and redefined Bitcoin as a serious portfolio asset, have slowed dramatically. Bitwise CIO Matthew Hougan said crypto’s drop signaled a broader “risk-off” shift in markets, with Bitcoin leading the pullback.

The selloff, analysts argue, is fueled by a mix of factors: long-term holders taking profits, institutional outflows, broader macro uncertainty, and the forced liquidation of overleveraged positions.

Tariff policy and political whiplash spark volatility

The turning point came just four days after Bitcoin’s all-time high, when Trump’s unexpected comments on trade tariffs sent global markets including crypto into a tailspin. Bitcoin, which had benefited from Trump’s earlier pro-crypto stance, proved highly sensitive to political volatility, underscoring how speculative sentiment is driving price action more than fundamentals.

The impact of this sudden policy shift is still being felt. As Chris Weston of Pepperstone Group noted, the October 10 liquidation event inflicted lasting psychological damage on major players, many of whom remain cautious.

Skepticism dominates as retail and altcoin markets bleed

Retail sentiment has soured significantly. Hougan noted that many investors are retreating early, fearing another major pullback. Meanwhile, altcoins especially smaller and less liquid tokens have been hit even harder. The MarketVector index tracking the bottom 50 of the top 100 digital assets is down roughly 60% year-to-date, amplifying investor losses across the board.

Michael Saylor’s Strategy Inc., once a bellwether for corporate crypto adoption, is now trading close to the value of its Bitcoin holdings, signaling a collapse in investor confidence in leveraged crypto plays.

No bullish catalysts, no natural recovery signals

Despite long-term optimism from some quarters, including Hougan who frames this pullback as a potential buying opportunity, sentiment remains subdued. Ergonia research director Chris Newhouse summarized the mood across Telegram chats and conferences: capital deployment is on hold, and few expect a near-term catalyst to reverse the trend.

Without clearer regulatory frameworks or a stabilizing macroeconomic backdrop, the market appears locked in a prolonged correction. Even among insiders, there’s a growing consensus that crypto’s current cycle may take time and policy clarity to reverse.

Bitcoin’s plunge below $95,000 isn’t just a technical move it reflects a deeper erosion of investor confidence, shaped by macro shocks, policy whiplash, and the withdrawal of institutional flows. As the Trump administration’s trade agenda adds fresh volatility to markets, crypto finds itself once again on the front line of global risk aversion. Whether this correction marks a consolidation phase or the start of a deeper slide may depend on the next moves in Washington as much as in the blockchain.

Source: Bloomberg

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Gerik

Economic

Quarterly contraction reveals mounting trade pressures

Japan’s gross domestic product (GDP) shrank by 0.4% in the July–September quarter of 2025, marking the country's first economic contraction in six quarters. Annualized, this decline equates to a 1.8% drop less severe than market expectations of a 0.6% quarterly fall, but still significant. The downturn reflects intensifying trade headwinds, particularly the impact of new U.S. import tariffs.

A key driver of the contraction was exports, which fell by 1.2% from the previous quarter and 4.5% on an annualized basis. Japanese exporters had previously accelerated shipments to beat the implementation of the tariffs, inflating earlier export figures, but the latest data show the impact of the trade barrier now taking full effect.

Trump's tariffs strike at the heart of Japan's industrial economy

The tariffs raised to 15% from a previous 25% on nearly all Japanese imports are a major blow to Japan’s manufacturing sector, particularly automakers like Toyota, Honda, and Nissan. Despite efforts by these firms to shift production abroad in recent years, Japan remains heavily reliant on export revenues, especially to the U.S. market.

The Cabinet Office noted that while private consumption inched up by 0.1% and imports dipped 0.1%, it wasn’t enough to offset the drag from declining exports. This weakness reflects the fragility of Japan’s domestic demand and its dependence on global trade dynamics.

Political stability returns, but economic risks linger

Adding to the economic uncertainty has been recent political transition. Only in October did Sanae Takaichi assume the role of prime minister, ending a period of internal instability. While her administration may bring some policy clarity, the structural challenges such as an aging population, sluggish domestic consumption, and global trade volatility remain unaddressed in the short term.

Japan’s Q3 2025 GDP contraction is a warning sign for an economy long dependent on exports, now caught in the crossfire of geopolitical trade policy. With Trump’s revived protectionist stance reshaping global trade, Japan faces a renewed test of its resilience and must either adapt its economic strategy or risk prolonged stagnation in a less predictable global environment.

Source: AP

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Gerik

Economic

BNPL's mainstream rise conceals troubling patterns

Once hailed as a convenient alternative to credit cards, Buy Now, Pay Later (BNPL) services like Klarna, Affirm, and Afterpay are now powering a silent financial wave that has grown both in size and systemic risk. With over 91.5 million U.S. users and 25% reportedly using BNPL to purchase groceries, the line between responsible spending and financial distress is rapidly blurring.

Nigel Morris, the Capital One co-founder and early Klarna investor, warned at Web Summit that people turning to BNPL for essentials is a sign of widespread economic strain. His concern is backed by recent data: default rates are accelerating, with 42% of BNPL users making at least one late payment in 2025 up from 34% in 2023.

Phantom debt and lack of visibility pose systemic risk

A critical flaw in the BNPL model is its lack of transparency. Most BNPL loans aren’t reported to credit bureaus, leading to so-called “phantom debt.” Borrowers may have multiple simultaneous BNPL loans, often with different providers, with no centralized system to track their cumulative exposure. Lenders are effectively flying blind, unaware that their customers might be overleveraged across platforms.

According to a 2025 CFPB report, 63% of BNPL users originated multiple loans in a single year, and 33% borrowed from several platforms simultaneously. Moreover, subprime borrowers are heavily represented in the user base, with approval rates for high-risk users exceeding 78%.

Regulatory reversals create further instability

The regulatory landscape has only added to the confusion. Under the Biden administration, BNPL loans were briefly slated for oversight under the Truth in Lending Act. But in 2025, the Trump-era CFPB reversed course, removing protections and declaring such oversight a “burden” on businesses. This rollback leaves consumers unprotected and the financial system exposed.

While the CFPB later released a report highlighting high repayment rates among first-time BNPL users, this contradicted broader data showing rising delinquencies. The mismatch underscores a major data gap, as lenders and regulators lack long-term visibility into borrower behavior especially among repeat or high-frequency users.

From retail checkout to embedded infrastructure

BNPL’s transformation from a fringe offering to mainstream infrastructure is accelerating. Klarna is now a licensed bank in Europe. Affirm has nearly 2 million debit cardholders. Both companies integrate seamlessly into Apple Pay and Google Pay, making installment debt practically invisible at checkout. PayPal processed $33 billion in BNPL transactions in 2024 alone.

Even traditional banks and payment processors like JPMorgan and Stripe are embedding BNPL options into their systems. As Morris notes, fintechs and SaaS companies alike are discovering that embedded finance may eventually generate more revenue than their core businesses.

A second, hidden bubble: B2B BNPL and securitization

The next phase of this boom may be even riskier: B2B BNPL. With $4.9 trillion in trade credit outstanding among U.S. firms, this market dwarfs the consumer space. BNPL providers are now targeting this arena, encouraging small businesses to increase spending by 40% on average often financed by rapidly growing, opaque debt.

Debt packaging is already underway. KKR purchased up to $44 billion in BNPL debt from PayPal. Elliott Advisors took on Klarna’s $39 billion loan book. Affirm has issued $12 billion in asset-backed securities. These moves eerily mirror the subprime mortgage playbook: slicing risky loans, repackaging them, and selling them to investors under unclear risk assumptions.

Consumer defaults could trigger spillover effects

Although BNPL balances are smaller than credit card or auto loans, the spillover risk is real. Because consumers prioritize BNPL repayments to maintain access to immediate purchases, they may default first on credit cards, auto loans, or student debt. This behavior skews financial risk models and could lead to wider delinquencies in traditional lending markets.

With student loan repayments resuming and unemployment hitting 4.3%, the underlying economic stress on borrowers is increasing. Over 5.3 million Americans are already in default on student loans, and 4.3 million are delinquent, according to Congressional data.

The ethical dilemma and the ‘mom test’

Morris, reflecting on his own Capital One legacy, raised an ethical concern: Are fintechs empowering the underbanked, or enabling self-harm? He referenced the “mom test” a principle from his lending days: if you wouldn’t recommend the product to your own mother, it shouldn’t be sold.

Worryingly, he believes some BNPL firms deliberately avoid reporting to credit bureaus to prevent customers from “graduating” to cheaper credit. It’s a business model built on repeat usage rather than financial advancement a potentially exploitative strategy.

An unregulated shadow banking system is taking root

BNPL may have started as a novel checkout solution, but it is rapidly becoming embedded in the fabric of global finance. Its current lack of visibility, limited regulation, and growing exposure to vulnerable populations create the conditions for a potentially cascading crisis.

Morris isn’t sounding the alarm for a crash yet. But with “phantom debt,” rising unemployment, and financial stress converging, he sees storm clouds gathering. As BNPL moves deeper into both consumer and business finance, the time for scrutiny is now before this invisible debt bubble becomes too large to contain.

Source: TechCrunch

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ING

Forex

Commodity

Economic

Energy – Novorossiysk resumes oil shipments

ICE Brent settled almost 1.2% higher last week after a Friday rally following a Ukrainian attack on the Russian port of Novorossiysk. This led to a temporary suspension of oil exports from the port, which handles approximately 2.2m b/d of oil, including Kazakhstan crude from the Caspian Pipeline Consortium (CPC) terminal. However, reports that port operations resumed saw oil prices coming under pressure early today.

While the oil market is expected to remain in a large surplus through 2026, it is also facing growing supply risks. The scale and intensity of Ukrainian drone attacks on Russian energy infrastructure are picking up. In addition to Friday's attack on Novorossiysk, Ukraine claimed responsibility for a strike overnight on Rosneft's 170k b/d Novokuibyshevsk refinery.

Risks are also emerging elsewhere, with Iran seizing an oil tanker in the Gulf of Oman after it passed through the Strait of Hormuz. The Strait is a key choke point for the global oil market, with around 20m b/d passing through it.

The latest positioning data shows that speculators increased their net long in ICE Brent by 12,636 lots over the last reporting week to 164,867 lots as of last Tuesday. This was predominantly driven by short covering. It suggests that some participants are reluctant to be short at the moment amid supply risks related to uncertainty over sanctions.

Speculators also increased their net long in ICE gasoil over the last week amid growing concerns over tightness in the middle distillate market. Speculators purchased 11,797 lots, leaving them with a net long position of 98,286 lots. The impact of sanctions on Russian diesel exports, along with continued Ukrainian drone attacks on Russian refineries, means tightness concerns are unlikely to disappear anytime soon, particularly as we head deeper into winter.

Metals – Complex under pressure

LME copper and aluminium pared weekly gains as China's economy cooled more than expected in October. Record-low investment and slower industrial growth compounded already weak consumer demand. Copper saw a little more than a 1% weekly gain in London, extending a year-to-date rally of over 20%. This is being driven by supply disruptions and trade risks linked to potential US tariffs. Some relief emerged as Freeport-McMoRan resumed partial operations at Indonesia's Grasberg mine after a fatal accident halted output in September. Aluminium held modest weekly gains, supported by concerns that Chinese smelters are nearing government-imposed capacity limits, constraining supply. Primary aluminium output in October reached 3.8mt (+0.4% year-on-year), but fell 9% from September.

The latest data from the Shanghai Futures Exchange (SHFE) shows weekly inventories for base metals -- except copper -- rose over the reporting period. Copper stocks declined for the fourth consecutive week, down 5,628 tonnes to 109,407 tonnes as of Friday. Aluminium inventories increased by 1,564 tonnes to 114,899 tonnes after four weeks of declines. Lead stocks rose by 4,208 tonnes for a second straight week to 42,790 tonnes. Nickel and zinc inventories also climbed, reaching 40,573 tonnes (+9.1% week on week) and 100,892 tonnes (+0.7% WoW), respectively.

Agriculture – India set to resume wheat exports

Recent reports suggest that India may resume wheat product exports (wheat flour and semolina) after more than three years of curbs. This reflects strong domestic supplies and an expected bumper harvest. The Ministry of Commerce and Industry is expected to initially permit 1mt of shipments. This follows India's recent approval of 1.5mt of sugar exports over the 2025/26 season.

The latest fortnightly report from the Brazilian Sugarcane and Bioenergy Industry Association (UNICA) shows sugarcane crushing in Central-South Brazil stood at 31.1mt in the second half of October, an increase of 14.3% YoY. Sugar output over this period rose 16.4% YoY to 2.1mt. Meanwhile, the sugar mix in CS Brazil over the fortnight was 46.02%. That's up slightly from 45.9% a year ago, but down from the previous fortnight. The cumulative cane crush so far this season still lags last year, down 2% to stand at 556mt, while cumulative sugar production totals 38.1mt, up 1.6% YoY.

Source: ING

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Samantha Luan

Forex

Political

Economic

Japan is set to send a senior diplomat to China in a bid to soothe tensions, public broadcaster NHK reported Monday, after China ratcheted up its response to Japanese Prime Minister Sanae Takaichi's comments over Taiwan.

Masaaki Kanai, a senior official at Japan's Ministry of Foreign Affairs, will be heading to China on Monday, the report said, in a move that follows China's issuance of an advisory against travel to Japan and a safety warning to students who live there.

Tensions between the neighbors have risen since Takaichi said this month that military force used in any Taiwan conflict could be considered a "survival-threatening situation," a classification that would provide a legal justification for Japan to support friendly countries that choose to respond.

Beijing has accused Takaichi of meddling in its internal affairs and demanded a retraction of the comment, but Tokyo has said its stance is unchanged from previous administrations.

In another sign of tension, four armed Chinese Coast Guard vessels sailed through disputed waters controlled by Japan on Sunday before leaving the area. Both countries lay claim to the cluster of uninhabited islands in the East China Sea called the Senkaku by Japan and the Diaoyu by China. The islands are administered by Japan. Chinese vessels are often spotted in or near the disputed waters.

China's Coast Guard said in a statement that it carried out a "rights enforcement patrol" through the waters and that it was a lawful operation.

Separately, an announcement of public sentiment among both Chinese and Japanese people was postponed at the request of the Chinese organizers, according to Japan's Genron NPO. The Japanese think tank releases regular public sentiment surveys in cooperation with China International Communications Group, a Chinese publishing group.

Last year's poll showed that about 90% of both Japanese and Chinese respondents did not think well of the other country.

Source: Bloomberg Europe

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Grace Montgomery

Gold edged higher, halting two days of losses spurred by fading optimism the US Federal Reserve will cut interest rates next month.

Bullion was trading around $4,100 an ounce on Monday, having lost more than 2% in the previous session. Expectations for another rate cut were scaled back last week as Fed officials showed little conviction for reducing borrowing costs. Lower interest rates typically make non-yielding bullion more appealing to investors.

A faction of Fed policymakers has stepped up warnings that inflation progress could slow or stall, with some – including Kansas City Fed chief Jeff Schmid and Boston head Susan Collins – speaking out against another rate cut in December. Others appear undecided: Atlanta President Raphael Bostic said "we'll see" about a December reduction.

Precious metals, meanwhile, are finding support from the prospect of the Fed injecting further liquidity into the financial system and a pivot to looser monetary policy. Barclays Plc now expects the Fed's reserve management purchases of Treasury bills to begin in February, sooner than previously forecast.

Gold rose 0.3% to $4,097.22 an ounce as of 8:00 a.m. in Singapore. The Bloomberg Dollar Spot Index was little changed. Silver gained, while palladium and platinum were flat.