Japan’s Financial Services Agency (FSA) has unveiled a significant proposal aiming to boost the nation’s cryptocurrency sector through regulatory overhaul.
The FSA seeks to reclassify cryptocurrencies under the Financial Instruments and Exchange Act (FIEA) instead of the current classification under the Payment Services Act. This move could pave the way for the introduction of spot Bitcoin exchange-traded funds (ETFs) on Japanese exchanges.
Reclassification under FIEA is intended to enhance investor protection and market transparency. The current framework restricting crypto’s status as financial securities would be revised.
A major component of the proposal involves reducing the tax burden on crypto investments. Currently subject to a progressive tax rate reaching up to 55%, the FSA suggests implementing a flat tax rate of 20% on crypto gains. This aligns cryptocurrency taxation more closely with taxes on traditional financial investments like stocks.
This regulatory shift is aligned with Japan’s broader ‘New Capitalism’ initiative. The strategy explicitly focuses on advancing Web3 infrastructure and fostering NFT development within the country.
The proposed changes are designed to significantly increase market attractiveness. Both institutional and retail investors are targeted by the reforms, with the overarching goal of positioning Japan as a competitive global hub for cryptocurrency innovation and investment.