Japan’s Financial Services Agency (FSA) Proposes New Crypto Regulations
Japan’s Financial Services Agency (FSA) has made a significant move by proposing a reclassification of cryptocurrencies as financial products under the Financial Instruments and Exchange Act (FIEA). This change aims to align the treatment of crypto with traditional securities, introducing a flat capital gains tax rate of 20% on profits from digital assets, which marks a shift from the existing progressive tax rates that can go as high as 55%.
This proposed tax reform is intended to alleviate the financial burden on investors, potentially encouraging a wider participation in the cryptocurrency market. The FSA’s initiative comes at a time when interest in cryptocurrencies is surging among Japanese retail investors, who are increasingly favouring digital assets over conventional investment options such as foreign exchange and bonds.
The proposal, unveiled on June 24, is scheduled for discussion during the Financial System Council’s session on June 25. If it proceeds as planned, the new regulations could set the stage for the endorsement of spot Bitcoin exchange-traded funds (ETFs) in Japan—an investment mechanism that has gained significant traction globally. Statistics indicate that over 1,200 financial institutions are currently invested in US-listed spot Bitcoin ETFs.
Expanding Japan’s Crypto Landscape
Aligned with Japan’s "New Capitalism" initiative, the proposed regulatory framework is designed to foster investment-led growth and facilitate the responsible advancement of Web3 technologies. According to the FSA, as of early 2025, more than 12 million active crypto accounts have been reported in Japan, with digital assets held on platforms exceeding 5 trillion yen (approximately AU$53.1 billion). The interest in cryptocurrencies has surpassed that of traditional investment vehicles among Japanese retail investors.
This ongoing policy reform is part of Japan’s comprehensive strategy for digital finance, which includes the commercialisation of stablecoins and trials for a national digital currency.
This evolution in Japan’s regulatory landscape represents a significant step towards integrating cryptocurrencies into the mainstream financial system, reflecting a growing recognition of digital assets’ role in modern investment portfolios.
In summary, the FSA’s proposal not only indicates a shift in regulatory approach but also aims to enhance Japan’s position in the global cryptocurrency landscape, encouraging a more robust and accessible investment environment for digital assets.
