Japan Plans Major Crypto Reform with New Tax Rules and ETF Access

Japan's Financial Services Agency (FSA) is drafting a proposal to reclassify digital assets and streamline their tax treatment, marking a pivotal shift in the country's regulatory approach. The reforms would treat cryptocurrencies similarly to traditional securities under the Financial Instruments and Exchange Act, potentially unlocking regulated crypto investment products like ETFs for the first time.

A key change involves replacing the current progressive tax model—with rates as high as 55%—with a flat 20% capital gains tax, aligning crypto with stock investments. This could significantly boost retail and institutional participation in Japan's crypto market, where over 12 million users hold active accounts and domestic platform assets exceed ¥5 trillion ($34 billion).

The MOVE reflects rapid adoption of digital assets in Japan, where crypto ownership now surpasses some conventional asset classes. The reforms aim to position Japan as a leader in integrating cryptocurrencies into mainstream finance while providing clearer guidelines for investors and businesses operating in the space.