Japan’s Financial Services Agency Seeks to Reclassify Crypto
In a move that could significantly reshape its digital asset landscape, Japan’s Financial Services Agency (FSA) has proposed recognizing cryptocurrencies as financial products. The regulatory shift would allow crypto assets to fall under the Financial Instruments and Exchange Act, bringing them in line with stocks and bonds — and opening the door to crypto-based ETFs (Exchange-Traded Funds) in Japan.
A Game-Changing 20% Flat Tax Proposal
Alongside reclassification, the FSA is advocating for a flat 20% capital gains tax on profits from cryptocurrencies. This would replace the current progressive tax system, where rates can climb as high as 55%, making crypto investment far more appealing for both retail and institutional investors.
By applying a standardized tax, Japan aims to level the playing field for crypto assets, aligning them more closely with traditional investment instruments such as equities.
Boosting Investment Under the “New Capitalism” Strategy
The FSA’s proposal aligns with Japan’s broader economic vision, known as “New Capitalism”, which emphasizes transforming Japan into an investment-driven economy. This policy shift is also a response to the surging domestic interest in crypto. As of January 2025, the country had more than 12 million active crypto accounts, with digital asset holdings exceeding ¥5 trillion ($34 billion).
The popularity of crypto in Japan has already surpassed traditional investment vehicles such as forex trading and bonds, particularly among tech-savvy retail traders.
Global Trends Push Japan Toward Reform
Japan’s crypto reforms also mirror growing institutional adoption globally. The FSA cited interest from over 1,200 global financial institutions, including U.S. pension funds and Goldman Sachs, that are already engaging in Bitcoin ETFs. By making crypto assets more accessible and attractive, Japan hopes to establish itself as a major player in the digital finance ecosystem.
Earlier this year, SBI VC Trade became the first licensed firm in Japan to operate with stablecoins, signaling growing regulatory clarity. Furthermore, a consortium including SMBC, TIS Inc., Ava Labs, and Fireblocks is actively working to commercialize stablecoins pegged to the yen and the U.S. dollar.
Conclusion: A Forward-Looking Shift for Crypto in Japan
If implemented, the FSA’s proposal would mark a historic shift in Japan’s crypto policy — making investing in digital assets more tax-efficient, regulated, and accessible. It could also stimulate innovation in blockchain-based finance and help Japan compete on the global fintech stage. With 2026 set as a target for implementation, the world will be watching as Japan evolves into a crypto-friendly economy with clearer rules and greater investor confidence.
