The Financial Services Agency of Japan (FSA) has introduced an initiative aimed at changing the legal status of cryptocurrencies in the country. According to the new proposal, crypto assets may be officially recognized as financial products under the Financial Instruments and Exchange Act. This decision paves the way for the launch of exchange-traded funds (ETFs) focused on digital assets and allows for the introduction of a single fixed tax rate of 20% on profits from cryptocurrency transactions.
This is reported by Business • Media
Tax Policy Changes and Impact on Investors
Under the proposed changes, Japan plans to shift from the current progressive tax scale, which has a rate of up to 55% for income from crypto assets, to a single fixed rate of 20%. This is expected to make investing in cryptocurrencies significantly more attractive for both retail and institutional investors, creating conditions similar to those in the stock market.
The initiative is part of a broader strategy called “New Capitalism,” which aims to transform Japan into a country focused on investment and innovation in the financial sector.
Development of the Crypto Market and Institutional Interest
According to the FSA, as of January 2025, there were over 12 million active crypto accounts registered in Japan, and the total value of assets on platforms exceeded 5 trillion yen (over $34 billion). The document also notes that the level of Japanese engagement in the crypto market has already surpassed their activity in the currency market or bonds, especially among tech-savvy retail investors.
“The participation of Japanese individuals in the crypto market has already exceeded their engagement with some traditional instruments, such as trading in the currency market or bonds, particularly among tech-savvy retail investors.”
The FSA’s proposal is also a response to the growing interest in crypto assets from major global financial institutions. Specifically, over 1,200 organizations, including U.S. pension funds and Goldman Sachs, are already investing in Bitcoin-based ETFs in the U.S. The Japanese regulator aims to foster similar market development in its own country, emphasizing the global expansion of funds specializing in digital assets.
Recently, initiatives to develop stablecoins have also intensified in Japan. For instance, in March of this year, SBI VC Trade obtained the first license in the country for stablecoin operations and announced plans to support the USDC token from Circle. In April, Sumitomo Mitsui Financial Group (SMBC), TIS Inc., Ava Labs, and Fireblocks signed a memorandum of cooperation to create stablecoins pegged to the U.S. dollar and Japanese yen, as well as to test their use for transactions involving tokenized assets such as stocks, bonds, and real estate.
It has been reported that Japan plans to officially classify cryptocurrencies as financial assets starting in 2026.