Japan plans to recognize cryptocurrencies as financial products.
Such an approach to crypto investing could pave the way for ETFs.
In addition, the FSA has prepared a proposal for a fixed rather than progressive tax on profits from crypto assets set at 20%.
The Financial Services Agency of Japan (FSA) has presented an initiative to change the legal status of cryptocurrencies, which could pave the way for the launch of exchange-traded crypto funds (#etf ) and the introduction of a fixed profit tax of 20%.
According to the proposal, cryptocurrencies should be recognized as financial products under the Financial Instruments and Exchange Act — a regulatory document governing activities related to securities and traditional financial instruments.
This reform means a shift from the current progressive tax scale, which provides for a tax of up to 55% on profits from crypto assets, to a single fixed tax of 20%, similar to that applied to profits from stock trading. Such a change will make investing in cryptocurrencies more attractive for both retail and institutional investors.
This step is part of a broader strategy of the Japanese government called 'New Capitalism,' which aims to make the country an investment-oriented economy.
The FSA noted that as of January 2025, there were more than 12 million active crypto accounts registered in the country, and the volume of assets held on platforms exceeded 5 trillion yen (about $34 billion).
The document also notes that Japanese participation in the crypto market has already exceeded engagement in some traditional instruments, such as currency trading or bonds, especially among tech-savvy retail investors.
The FSA's proposal is also a response to the growing institutional interest in crypto assets worldwide. According to the data provided, more than 1,200 financial institutions, including US pension funds and Goldman Sachs, are already investing in Bitcoin-based exchange-traded funds in the US.
The regulator stated that it intends to promote such market development in Japan, particularly in the context of the global expansion of funds focused on digital assets.
Let us remind you that in March of this year, SBI VC Trade, a subsidiary of the financial giant SBI Holdings, received the first license in the country for operations with stablecoins and announced preparations to support the USDC token from Circle.
In April, Sumitomo Mitsui Financial Group (SMBC), TIS Inc., Ava Labs, and Fireblocks signed a memorandum of cooperation for the commercialization of stablecoins in Japan. The plan includes the issuance of tokens pegged to the US dollar and the Japanese yen, as well as testing their use in settlements for tokenized assets such as stocks, bonds, and real estate.
It was recently announced that the country intends to classify cryptocurrencies as financial assets starting in 2026.
