The Financial Services Agency of Japan (FSA) has proposed a review of the legal status of cryptocurrencies, which could lead to the launch of exchange-traded funds based on digital assets (ETFs) and the establishment of a flat income tax rate of 20%.
This is reported by Finway
A New Approach to Regulating the Crypto Market in Japan
According to the FSA’s initiative, cryptocurrencies are set to gain the status of financial products under the national law “On Financial Instruments and Exchanges,” which currently regulates the securities market and traditional financial instruments. This step will allow investors to access exchange-traded funds based on crypto assets and create clearer conditions for investing in digital assets.
Additionally, it is proposed to replace the existing progressive tax scale on profits from cryptocurrency transactions, which can reach up to 55%, with a fixed rate of 20%. This decision will make investing in cryptocurrencies more attractive to a broader range of participants, including both retail and institutional investors, as it will be aligned with the taxation of income from stock trading.
Growing Interest and Institutional Support
The proposed changes are part of the government’s “New Capitalism” strategy aimed at attracting investment into the national economy. The FSA reports that as of January 2025, there are over 12 million active crypto accounts registered in Japan, and the total volume of digital assets on platforms exceeds 5 trillion yen (approximately 34 billion USD).
The document notes that the involvement of Japanese investors in the cryptocurrency market has surpassed interest in traditional financial instruments, including the currency market and bonds, especially among tech-savvy users.
“The FSA’s proposal is also a response to the growing institutional interest in crypto assets worldwide. According to the data provided, over 1,200 financial institutions, including U.S. pension funds and Goldman Sachs, are already investing in Bitcoin-based exchange-traded funds in the U.S.”
The regulator intends to stimulate the development of a similar market in Japan, especially in the context of the international expansion of funds focused on digital assets.
It is worth noting that in March of this year, SBI VC Trade, a subsidiary of the financial holding SBI Holdings, received Japan’s first license for stablecoin operations and is preparing to implement support for the USDC token from Circle. In April, Sumitomo Mitsui Financial Group (SMBC), TIS Inc., Ava Labs, and Fireblocks signed a memorandum of cooperation to commercialize stablecoins in Japan. Plans include issuing tokens pegged to the U.S. dollar and the Japanese yen, as well as testing their use for transactions involving tokenized assets such as stocks, bonds, and real estate.
The decision to recognize cryptocurrencies as financial products could come into effect as early as 2026.