24th June 2025 – (Tokyo) Japan’s Financial Services Agency (FSA) is exploring a significant regulatory shift that could reclassify cryptocurrencies as financial products under the Financial Instruments and Exchange Act (FIEA), potentially reducing capital gains tax on digital assets to a flat 20%. This change, if implemented, would align crypto taxation with stocks, easing the current tax burden where rates can climb as high as 55%.
On 24th June, the FSA released a policy proposal titled “Review of the Systems Surrounding Crypto Assets”, signalling its intent to move crypto regulation from the Payment Services Act to the more stringent FIEA. A working group has been formed to assess the proposal, which will be discussed at the Financial System Council’s plenary session on 25th June.
Beyond tax reform, the proposed changes could pave the way for domestic Bitcoin ETFs, further integrating cryptocurrencies into Japan’s financial ecosystem. The initiative aligns with the government’s 2025 New Capitalism Grand Design and Implementation Plan, which seeks to promote Web3 and crypto industries as tools to address societal challenges, enhance productivity, and unlock global opportunities for Japan’s cultural and regional assets.
The FSA’s broader regulatory overhaul also includes a draft framework dividing crypto assets into two categories based on their purpose and decentralisation. Type 1 tokens, used for business or fundraising, would face stricter disclosure rules to protect investors. Meanwhile, Type 2 assets, like Bitcoin and Ethereum, which are seen as decentralised and non-fundraising, would be regulated primarily through exchange oversight.
