Japan’s Financial Services Agency (FSA) plans to push for a review of how the country’s tax code treats cryptocurrency, aiming to align gains more closely with stock investments and pave the way for exchange-traded funds, Nikkei reported on Tuesday.
The agency is preparing to submit the request by the end of August, targeting reforms for the 2026 fiscal year. The proposal includes shifting crypto gains into a separate tax category with a flat 20% rate, in line with listed equities, rather than the current “miscellaneous income” classification subject to progressive rates of up to 55%. Industry groups have also asked regulators to allow a three-year loss carry-forward under the new framework.
Currently, Japanese taxpayers must declare crypto trading gains as miscellaneous income, where profits are aggregated with salary and other income and taxed at progressive rates up to 55% (including local inhabitant tax). This treatment, introduced after the 2017 ICO boom, has been criticized for discouraging retail trading and forcing startups abroad. By contrast, stock and FX gains are taxed separately at a 20.315% flat rate. The Japan Cryptoasset Business Association (JCBA) has lobbied for years for parity with equities, arguing that the current system hampers competitiveness.
In parallel, the FSA intends to introduce legislation in 2026 that would reclassify crypto under the Financial Instruments and Exchange Act as a financial product, moving away from its current treatment as a means of payment under the Payment Services Act. Officials say the change would make it easier for domestic firms to launch crypto ETFs, part of a broader effort to strengthen Japan’s competitiveness in digital assets.
Japan’s ETF market is worth over ¥80 trillion ($560 billion), dominated by equity products, but so far no crypto ETFs have been approved domestically. Investors currently access exposure through U.S.-listed bitcoin ETFs or regulated trusts in Singapore. Reclassification under the FIEA would give the FSA authority to license crypto ETFs in the same manner as commodity and equity funds.
First Yen Stablecoin Approval Expected
Separately, the regulator is expected to approve the country’s first yen-denominated stablecoin later this year. The token, JPYC, will be issued by a Tokyo-based fintech of the same name. According to earlier reports, the company plans to circulate 1 trillion yen ($6.8 billion) worth of the stablecoin over three years.
JPYC Inc., founded in 2019, has already issued a prepaid, non-blockchain version of its stablecoin under Japan’s Fund Settlement Act and runs pilots with firms such as GMO Internet and Daiwa House. The new version, issued under amended stablecoin rules that took effect in June 2023, must be backed 1:1 with bank deposits and issued by a licensed entity such as a trust bank or registered fund transfer business. JPYC has partnered with Minna Bank, a digital lender owned by Fukuoka Financial Group, to meet these requirements.
Japan has been gradually opening the door to wider crypto adoption after years of cautious oversight. The proposed tax changes and stablecoin approval signal a new stage of regulatory clarity for both investors and financial institutions.
The FSA tightened rules after the 2014 Mt. Gox collapse and the 2018 Coincheck hack, introducing a licensing regime for exchanges and some of the strictest custody rules globally. By 2023, these safeguards allowed Japanese investors to withdraw funds normally from FTX Japan when its parent collapsed, in contrast to overseas customers. Officials now frame tax reform and stablecoin approval as part of “Phase 2” — moving from investor protection toward active market development.
