Japan’s Bold Crypto Revolution: Bitcoin ETFs Greenlit & Capital Gains Tax Slashed to 20%

Tokyo shakes up global crypto markets with a regulatory double-whammy—clearing the path for mainstream Bitcoin investment while axing punitive taxes.

The Financial Services Agency (FSA) just handed institutional investors the keys to the kingdom. Approved Bitcoin ETFs? Check. A 20% capital gains ceiling? Done. Suddenly that "lost decade" of deflationary thinking looks ready for a blockchain-powered reboot.

Critics whisper about speculative risks, but tell that to the hedge funds already repricing JPY-denominated crypto assets. When traditional finance starts lobbying for lighter taxes, you know the game's changed.

One cynical take? After years of watching Singapore and Hong Kong eat their lunch, Japan's bureaucrats finally found the crypto on-ramp—buried under stacks of stale yen.

• Japan plans to reclassify crypto under FIEA, enabling the launch of Bitcoin ETFs.
• The proposed reform would lower the crypto tax rate in Japan to 20%, flat rather than 55%.
• Over 12 million crypto accounts in Japan signal rising demand amid regulatory reform plans.

The Financial Services Agency (FSA) of Japan has revealed an essential regulatory initiative to reclassify crypto assets as financial products legalized under the Financial Instruments and Exchange Act (FIEA).

The proposal, titled “Considerations Regarding the Structure of the System Surrounding Crypto Assets (Virtual Currencies),” was released on June 24 and is scheduled for review at the Financial System Council meeting on June 25.

However, now cryptocurrencies are considered to be governed by the Payment Services Act, which treats them as digital payment tools. Converting to FIEA WOULD advance them to the status of regulated securities.

With such a reclassification, there should be a possibility of listing Bitcoin exchange-traded funds (ETFs) in Japan. According to the FSA, this would also enhance investor protection and bring cryptocurrencies in line with existing financial products such as equities and bonds.

The agency also confirmed the formation of a dedicated working group to update the crypto asset regulatory framework. This marks a change in Japanese policy on digital assets, which imposes strict restrictions and taxes on institutional investors’ involvement.

Japan Targets Investment Growth Through Crypto Reform

One of the proposal’s main features is that it would lower the rate from a maximum of 55% to a flat 20%, matching the capital gains tax applied to stock investments. This would align with the gains of digital assets with the capital gains tax on stocks making it more attractive to individual and institutional investors.

The proposed tax change is part of Japan’s broader “New Capitalism” strategy, which emphasizes innovation and investment-led growth. Officials believe lowering the tax burden could increase domestic participation and prevent capital flight. The country currently has over 12 million active crypto accounts, and assets held on exchanges exceed 5 trillion yen (approximately $34 billion).

Experts in the market have observed that some companies, like Metaplanet, have transferred crypto-based operations to other countries because of Japan’s strict taxation policies. The transition to a 20% flat rate may influence companies to increase their business digital assets operations in Japan rather than overseas.

Also Read: Japan’s FSA Proposes Crypto Shift—Are Utility Tokens in Trouble?

Web3 Infrastructure and Global Influence Drive Policy Shift

The reclassification is also an indicator of the Japanese intentions to build Web3 infrastructure. The revised Grand Design and Action Plan for New Capitalism 2025 outlines support for NFTs, tokenized real-world assets, and alternative investments as part of Japan’s economic transformation.

The decision comes amid the same regulatory momentum observed in the United States, which has passed crypto ETFs under the Trump administration. The FSA reported that global trends such as significant institutional investment in US-based bitcoin ETFs had motivated its reform agenda.

If the proposal advances through the legislative process, the country could become one of the most crypto-friendly major economies, signaling a historic transition from restriction to adoption.

Also Read: XRP Eyes $2.50 Rebound: Analyst Predicts Big MOVE Ahead of ETF Buzz