Japan Moves to Reclassify Crypto, Opening Door for ETFs and Tax Cuts

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Japan’s Financial Services Agency (FSA) has proposed treating cryptocurrencies as “financial products,” a major regulatory shift that could enable crypto ETFs and slash tax rates on digital asset gains.

Under the new plan, crypto would fall under the Financial Instruments and Exchange Act (FIEA), aligning it with traditional securities.

The change would also replace Japan’s steep progressive crypto tax—currently as high as 55%—with a flat 20% rate, matching stock investments.

The move is part of Japan’s “New Capitalism” initiative, aiming to boost investment-driven growth. With over 12 million active crypto accounts and $34 billion in holdings, the FSA noted that crypto now outpaces some traditional investments like FX and corporate bonds among retail traders.