Japan is taking bold steps toward reshaping its cryptocurrency regulations—and investors could soon enjoy major tax relief.
On June 24, 2025, Japan’s Financial Services Agency (FSA) released a policy proposal that could dramatically change how cryptocurrencies are treated in the country. The key idea? Reclassify crypto assets under the Financial Instruments and Exchange Act (FIEA), a move that would reduce capital gains taxes on crypto to a flat 20%, aligning them with the taxation rules for stocks.
From Payment Tools to Financial Products
Currently, cryptocurrencies in Japan are regulated under the Payment Services Act, which subjects investors to variable income tax rates of up to 55%. This new proposal, titled “Review of the Systems Surrounding Crypto Assets,” suggests moving crypto under the FIEA, effectively reclassifying them as financial products.
The proposal will be formally discussed at the Financial System Council meeting on June 25. If approved, this change would not only ease the tax burden but also open the door for domestic Bitcoin ETFs—something the Japanese crypto community has long awaited.
A Strategic Push for Web3 Growth
This shift is part of Japan’s broader plan to promote Web3 innovation and position itself as a leading investment-friendly nation. The initiative is outlined in the country’s revised 2025 “New Capitalism” strategy, which highlights Web3 as a tool to boost productivity, solve social issues, and showcase Japanese culture and innovation on the global stage.
Crypto Asset Classification Framework in Focus
This proposal also ties into Japan’s larger regulatory effort to more precisely define and monitor digital assets. The FSA recently introduced a two-tiered classification system:
Type 1 Tokens: Issued by companies for fundraising purposes. These will face stricter disclosure requirements to ensure investor protection.
Type 2 Tokens: Include decentralized assets like Bitcoin and Ethereum, which are not issued for fundraising. These will be subject to lighter oversight, mainly through exchange regulation.
Digital Yen and Financial Innovation
Meanwhile, Japan is moving ahead with its digital yen pilot program, launched in 2023, and continues to strengthen its digital financial infrastructure.
If this regulatory overhaul goes through, Japanese crypto investors could see simpler tax filing, fewer compliance hurdles, and more opportunities to participate in the growing Web3 economy.
