Japan could scrap the current taxation rate of crypto gains to 20% from the current 55%.
The Japanese government is considering significant changes to its current cryptocurrency guidelines, according to a proposal published by the Financial Services Agency (FSA) on Tuesday.
If approved, the proposal could lead to a raft of changes in the country’s crypto industry, including the potential lifting of the restriction on Bitcoin exchange-traded funds (ETFs).
The FSA’s general meeting on Wednesday will discuss the proposed changes, primarily focusing on the transfer of cryptocurrency assets from the current framework under the Payment Services Act to the Financial Instruments and Exchange Act (FIEA).
In addition to referring to crypto assets as “financial products,” as reported by Coinpost, the system change would pave the way for the establishment of a task force to oversee the industry.
Other key changes include a significant tax cut from the current progressive system, with a maximum rate of up to 55%, to a self-reporting taxation framework with an approximate rate of around 20%.
Japan’s intended shift to a more progressive regulatory framework for digital assets comes amid a widespread push for friendlier rules, particularly in the United States (US), which aims to facilitate innovation, adoption and financial inclusivity.
Regulation under FIEA would bring crypto taxation into parity with the stock market in Japan, making it possible to lift the ban on Bitcoin ETFs and support institutional interest in digital assets.
Customer protection remains a priority for the FSA, with the shift to FIEA likely to strengthen the structure. Known for its progressive outlook on crypto assets, Japan is working to achieve the goal of becoming an investment-based country. This would be supported by the creation of new opportunities for its citizens across key web3 platforms and Decentralized Finance (DeFi) platforms.
Japan’s crypto market is estimated to hit $2 billion in revenue by the end of 2025, with an annual growth rate (CAGR 2025-2026) of 3.44%, according to Statista.
Statista also projects that the number of cryptocurrency users in Japan will grow to 18.69 million by 2026, underscoring the need for a progressive regulatory environment.
