Japan is eyeing changes to crypto rules that could lower taxes and allow ETFs

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Japan’s financial regulator plans to overhaul crypto regulations, which may lead to lower taxes and domestic crypto ETFs.

The Financial Services Agency (FSA) will assess whether crypto regulation under the Payments Act is still appropriate given that tokens are now used more for investment than for payments. This review could lead to crypto being reclassified as financial instruments under Japan’s investment law.

Such a change would strengthen investor protection and potentially lead to “dramatic changes,” according to Yuya Hasegawa, an analyst at cryptocurrency exchange Bitbank Inc. It could support efforts to reduce crypto taxes from 55% to 20%, aligning with stock taxes. The change may also pave the way for the launch of crypto ETFs, currently banned in Japan.

The FSA official declined to specify potential outcomes, saying the review could continue into the winter with no predetermined conclusions. Crypto executives in Japan have long advocated for less stringent regulations to reduce costs and spur growth, viewing the current rules as overly restrictive. Recently, Japan’s central bank kept interest rates steady at 0.25% after core inflation rates were indicated at 2.8%.

This regulatory reassessment comes as Japanese companies such as Sony explore blockchain technology and major banks consider issuing stablecoins under recently implemented laws. Trading volumes on Japanese crypto exchanges are recovering, approaching $10 billion monthly, up from $6.2 billion in 2023, according to CCData.

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