Japan plans crypto reclassification and ETF access

New FSA proposal could attract retail and institutional crypto investors by reducing capital gains taxes.

Japan may classify crypto as financial products, enabling ETFs and cutting tax rates to 20%.

Japan’s Financial Services Agency has proposed classifying cryptocurrencies as financial products under the Financial Instruments and Exchange Act.

The change would pave the way for crypto ETFs and apply a flat 20% capital gains tax, replacing the current progressive system, which taxes some gains at rates up to 55%. The proposal is part of the government’s broader ‘New Capitalism’ strategy to boost investment.

Interest in crypto has surged nationwide, with over 12 million active accounts and holdings exceeding 5 trillion yen. The FSA noted that crypto now surpasses traditional products like FX and bonds in popularity among retail investors.

Japanese regulators hope the shift will attract domestic and international institutional investors, following global trends such as spot Bitcoin ETF adoption in the US.

Japan is also moving towards stablecoin adoption. In April, SMBC and Ava Labs began exploring stablecoins pegged to the yen and dollar to settle tokenised assets. Meanwhile, SBI VC Trade secured Japan’s first stablecoin-handling licence, preparing to support USDC issuance.

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