In a significant regulatory shift, Japan’s Financial Services Agency (FSA) has proposed measures aimed at enhancing cryptocurrency investor access and market transparency. The key elements include allowing Bitcoin exchange-traded funds (ETFs) and implementing a flat 20% tax rate on cryptocurrency gains.
The proposal seeks to reclassify cryptocurrencies under the Financial Instruments and Exchange Act (FIEA), lifting the current prohibition on Bitcoin ETFs. The FSA has scheduled this proposal for review by the Financial System Council.
Additionally, the plan replaces Japan’s previous progressive tax rates on cryptocurrency profits, which could reach up to 55%, with a uniform 20% rate. This change is intended to align crypto taxation with that of traditional stock investments and potentially attract more investors to the asset class.
This regulatory initiative forms a core component of Japan’s ‘Grand Design and Action Plan for New Capitalism (Revised Edition) 2025’. The broader strategy focuses on fostering innovation within the Web3 sector, specifically highlighting decentralized finance (DeFi), non-fungible tokens (NFTs), and token-based ecosystems.
The proposed changes are expected to improve market liquidity, bolster investor confidence, and increase accessibility to digital assets. If implemented, they would position Japan as a more significant player in the evolving Web3 landscape. Stakeholders are advised to await the outcome of the Financial System Council’s review for further details.