Japan’s Financial Services Agency (FSA) has unveiled a major proposal to reclassify cryptocurrencies, potentially paving the way for crypto exchange-traded funds (ETFs) and easing the tax burden on digital asset investors.
Announced on Tuesday, the proposal recommends treating cryptocurrencies as “financial products” under the Financial Instruments and Exchange Act (FIEA)—the same regulatory framework that applies to traditional securities and financial instruments.
This reclassification could significantly reform Japan’s tax system for crypto, replacing the current progressive tax rates—reaching as high as 55%—with a flat 20% tax on digital asset income. The move would align crypto taxation with that of stock investments, potentially boosting interest from both retail and institutional investors.
The initiative is part of Japan’s broader “New Capitalism” policy, which aims to transform the country into a more investment-driven economy.
Japan Exceeds 12 Million Active Cryptocurrency Accounts
The move comes as interest in crypto continues to grow as a mainstream investment asset. According to the Financial Services Agency (FSA), over 12 million domestic crypto accounts were active as of January 2025, with digital assets held on platforms surpassing ¥5 trillion (approximately $34 billion).
The FSA also noted that crypto ownership in Japan has now outpaced participation in some traditional financial products like foreign exchange (FX) and corporate bonds, especially among tech-savvy retail investors.
The proposal further reflects rising global institutional involvement in crypto markets. The FSA highlighted that more than 1,200 financial institutions—including U.S. pension funds and Goldman Sachs—currently hold U.S.-listed spot Bitcoin ETFs.
Japanese regulators aim to support similar developments domestically, especially as global fund flows into crypto continue to expand.
SMBC and Ava Labs to Collaborate on Stablecoin Development in Japan
In April, Sumitomo Mitsui Financial Group (SMBC), along with TIS Inc., Ava Labs, and Fireblocks, signed a Memorandum of Understanding to explore the commercialization of stablecoins in Japan. The initiative aims to develop stablecoins pegged to both the U.S. dollar and the Japanese yen.
The collaboration will also explore the use of stablecoins for settling transactions involving tokenized real-world assets such as stocks, bonds, and real estate.
This move follows Japan’s first issuance of a stablecoin license in March to SBI VC Trade, a subsidiary of financial giant SBI. The company announced plans to support Circle’s USDC, signaling growing regulatory support for stablecoin adoption in the country.
