Japan moves to re-classify crypto as securities, opening door to ETFs and a 20% flat tax

Japan’s Financial Services Agency (FSA) has published a proposal to bring cryptocurrencies under the Financial Instruments and Exchange Act (FIEA), the statute that already governs stocks, bonds and traditional exchange-traded funds. The change would give crypto the formal status of “financial products,” paving the way for spot-based crypto ETFs and replacing today’s sliding tax scale with a uniform 20 % capital-gains rate.

Under current law, crypto assets are treated primarily as digital payment methods overseen by the Payment Services Act. The FSA paper argues that the market has outgrown that framework and now requires the same disclosure, insider-trading and custody rules that apply to securities. If the Cabinet Office approves the draft, it will be reviewed by the Financial System Council before a bill is submitted to the Diet, most likely in early 2026.

A lighter — and simpler — tax regime

Crypto gains are presently lumped into “miscellaneous income,” where rates can reach 55 % after local levies. The overhaul would align digital-asset taxation with equities: a flat 20 % on realised gains and the ability to carry losses forward against future profits. The FSA says the shift is intended to attract retail investors deterred by high marginal rates and to encourage domestic institutions to launch on-shore crypto products. 

Adoption metrics underline the policy push

Japan counted more than 12 million active crypto trading accounts as of January 2025, holding assets worth over ¥5 trillion (≈ US $34 billion). The agency notes that crypto participation already outstrips retail interest in foreign-exchange margin trading and corporate bonds, two markets long dominated by individual investors in Japan. 

Last year, Japanese lawmaker Satoshi Yamada called on the government to consider adopting Bitcoin as part of its foreign exchange reserves, joining a growing global conversation about cryptocurrency’s role in national financial strategies.

Institutional momentum is also rising. The FSA cites data showing 1,200-plus global financial institutions — including U.S. pension funds and Goldman Sachs — now hold U.S.-listed spot-Bitcoin ETFs, inflows it hopes to replicate domestically once a Japanese wrapper is available. 

Japan’s crypto revenue | Source: Statista Market Insights

Stablecoin groundwork accelerates

Broader digital-asset infrastructure is gathering pace alongside the ETF plan. In April 2025, Sumitomo Mitsui Financial Group (SMBC), TIS Inc., Ava Labs and Fireblocks signed a memorandum to explore issuing US-dollar- and yen-pegged stablecoins and using them to settle tokenised stocks, bonds and real estate.

Earlier, in March 2025, SBI VC Trade became the first firm licensed to handle offshore stablecoins, clearing the way for Circle’s USDC to launch in Japan.

Timeline and next steps

The proposal will be debated at the Financial System Council meeting scheduled for 25 June. If endorsed, the FSA will draft detailed listing and custody guidelines while coordinating with the Tokyo Stock Exchange. Market participants expect the first spot-crypto ETFs to list in fiscal-year 2026 at the earliest, once rule-making and exchange testing are complete. 

Strategic context

Prime Minister Fumio Kishida’s broader “New Capitalism” agenda aims to transform Japan into an investment-driven economy. Regulators believe harmonising crypto with mainstream securities law — and taxing it the same way — will plug capital flight to Singapore and Hong Kong and position Tokyo as a regional hub for regulated digital assets. 

If enacted, the FSA’s plan would give Japan its first path to domestically listed crypto ETFs, ease the tax burden for millions of retail traders, and integrate stablecoins into the country’s payments and capital-markets infrastructure — marking the most significant overhaul of Japan’s digital-asset rules since the 2018 Coincheck hack.