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Japan proposes a fixed tax rate of 20% on cryptocurrency and legalizes Bitcoin ETFs

Japan is in the process of reclassifying cryptocurrency under the Financial Instruments and Exchange Act (FIEA), signaling a major shift in its regulatory approach. On June 24, the Financial Services Agency (FSA) announced a proposal aimed at considering digital assets as financial products.

If approved, this move would reduce the current progressive cryptocurrency tax rate of up to 55% to a fixed rate of 20%. This brings parity with equity investments, making the cryptocurrency sector more attractive to retail and institutional investors. The proposed changes will be discussed at the Financial Services Council meeting on June 25.

Furthermore, the FIEA classification will open the door for spot Bitcoin exchange-traded funds (ETFs) in Japan. Currently, legal restrictions are hindering the development of such products. However, this amendment will remove barriers and allow regulated cryptocurrency ETFs, similar to those approved in the United States.

Japan's cryptocurrency policy is being reformed

At the beginning of 2025, the FSA continued efforts to align Japan's digital asset rules with securities regulatory standards. Within this framework, the FSA convened a closed study group to review the cryptocurrency landscape. A formal legislative proposal may be submitted in 2026.