- Japan’s FSA is discussing a crypto tax reduction from 55% to 20%.
- Bitcoin ETFs may be approved, aligning Japan with global markets.
- Regulators are also tightening oversight on unlicensed exchanges.
Japan’s Financial Services Agency (FSA) is considering lowering the tax rate on cryptocurrency gains. According to Colin Wu, the tax rate would be slashed from 55% to 20%, a move that could encourage more investors to enter the market.
If this goes through, the tax cut would put cryptocurrencies on par with stock market capital gains. This could really make digital assets more attractive to both everyday and institutional investors.
Regulators have been taking a close look at crypto taxation policies for months, particularly ahead of Japan’s October elections, where tax cuts became a central topic. According to local media Nikkei, the proposed change is part of broader discussions on modernizing Japan’s financial framework and aligning it with global trends.
Bitcoin ETFs Could Expand Market Access
Adding to the potential good news, Japan is also exploring the approval of Bitcoin exchange-traded funds (ETFs). These financial instruments allow investors to gain exposure to Bitcoin without directly holding the asset, reducing risks associated with self-custody.
Related: Bank of Japan’s Interest Rate Move Signals Market Shifts in Crypto
Compared to the United States and Canada, where Bitcoin ETFs are already a thing, Japan has usually played it safe with crypto regulations. But this potential approval could increase institutional participation in the country’s crypto sector, giving market confidence a big boost.
According to Hay Insights Japan, the country has been slower than other regions in adopting ETFs due to its stringent financial regulations. However, if the FSA moves forward with this plan, Japan’s crypto market could become more competitive internationally.
Stricter Oversight on Unregulated Exchanges
While considering tax cuts and ETF approvals, Japan is also intensifying its crackdown on unlicensed crypto exchanges. The FSA recently warned KuCoin, Bybit, and Bitget for operating without proper authorization.
Regulators are also working with Google and Apple to remove these platforms from their app stores, signaling a stronger stance against unregulated trading activities.
Related: Japan Tells Apple and Google to Yank These 5 Crypto Exchange Apps
Balancing Act: Growth vs. Investor Protection
The agency’s actions reflect Japan’s dual approach—supporting crypto innovation while enforcing strict compliance measures. Officials believe this strategy will help balance market growth and investor protection.
The FSA is expected to finalize its policy decisions by June 2025, with legal reforms potentially introduced in the 2026 National People’s Congress.
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