Japan’s Financial Services Agency (FSA) is preparing sweeping changes to its digital asset framework. The changes, which combine tax reforms and regulatory upgrades, could introduce exchange-traded funds (ETFs) tied to cryptocurrencies.
The initiative signals Japan’s intent to integrate crypto into mainstream finance and attract broader investment.
Tax Burden Under Review
The reform package, reported domestically, includes two key parts. First, it consists of revising the tax code that would move crypto from comprehensive taxation to the same category as equities. Second, it includes a legal amendment reclassifying crypto as a financial product, enabling the FSA to apply insider-trading rules, disclosure standards, and investor protections under the Financial Instruments and Exchange Act.
Currently, Japan taxes crypto gains as “miscellaneous income,” with progressive rates that can exceed 50 percent once local levies are included. Alternatively, equities and bonds are subject to a 20 percent flat tax.
According to Nikkei, the FSA has proposed moving crypto into that 20 percent system in fiscal 2026. Investors would also be able to carry forward losses for three years. Officials believe parity with stocks will reduce investor burden and increase market activity.
Regulatory Shift to Enable ETFs
The FSA’s second pillar involves amending securities law to classify crypto as a financial product. This would clear the path for crypto ETFs, including spot Bitcoin funds, which remain unavailable in Japan. Observers argue ETFs could provide accessible, regulated options for investors while boosting market transparency.
According to BeInCrypto, the agency also plans an internal restructuring, creating a bureau dedicated to digital finance and insurance. That reflects how crypto has become intertwined with broader financial systems, requiring consistent oversight.
Japan’s history with crypto illustrates both risk and resilience. In 2014, Tokyo-based Mt. Gox once processed over
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Author: Shota Oba
