Japan’s Financial Services Agency (FSA) is poised to reclassify crypto assets as financial products under the Financial Instruments and Exchange Act (FIEA), a move that could significantly reduce capital gains tax on crypto to a flat 20%. This shift, if approved, would align crypto taxation with that of stocks, easing the current burden that can see rates as high as 55%.
The FSA unveiled this key policy proposal on June 24, signaling a major regulatory overhaul for the cryptocurrency sector. A new working group has been formed to explore moving crypto regulation from the current Payment Services Act to the more stringent FIEA. This proposal is set for discussion at the Financial System Council’s plenary session on June 25.
Beyond tax relief for investors, the proposed reclassification could also pave the way for domestic Bitcoin ETFs, further integrating digital assets into Japan’s mainstream financial system.
This initiative is a cornerstone of Japan’s broader strategy to solidify its position as an investment hub and foster growth in the Web3 and crypto sectors. The government’s 2025 “New Capitalism Grand Design and Implementation Plan” emphasizes that responsible Web3 development can address societal challenges, boost productivity, and unlock global opportunities for Japanese assets.
This potential regulatory change also complements Japan’s ongoing efforts to refine digital asset classification. The FSA recently introduced a draft framework categorizing crypto assets into two types based on their purpose and decentralization. Type 1 tokens, used for business or fundraising, would face stricter disclosure rules, while Type 2 assets like Bitcoin and Ethereum, deemed decentralized and non-fundraising, would primarily be monitored through exchange oversight.
These developments come as Japan rapidly advances its digital financial ecosystem, with the digital yen pilot program, initiated in 2023, now fully operational.
