Japan Could Soon Approve Crypto ETFs Under New FSA Plan

Key Takeaways

• Japan’s financial regulator wants to classify crypto as a financial product under securities law.
• The move could pave the way for long-awaited crypto ETFs in the country.
• The proposal also includes a plan to slash the crypto tax rate from up to 55% to a flat 20%.

Japan may finally be ready to embrace crypto as a mainstream financial asset.

The country’s Financial Services Agency (FSA) has submitted a proposal to bring cryptocurrencies under the Financial Instruments and Exchange Act—a key step that would reclassify them as financial products rather than payment methods.

If the change is approved, it could clear the path for crypto exchange-traded funds (ETFs), something Japan’s crypto community has been calling for since ETFs first took off globally.

The proposal doesn’t stop there. It also recommends slashing Japan’s notoriously high crypto tax rate—currently as high as 55%—to a flat 20%, putting it in line with capital gains tax on stocks and other securities.

Regulators Move To Modernize Japan’s Crypto Rules

The FSA’s proposal was outlined in a policy document titled “Considerations Regarding the Structure of the System Surrounding Crypto Assets (Virtual Currencies).”

The agency also announced the formation of a dedicated working group to craft updated crypto rules.

The shift marks a significant departure from Japan’s earlier approach.

Although it was one of the first countries to regulate crypto, Japan banned investment products like crypto ETFs and enforced aggressive taxation, discouraging institutional adoption.

But now, amid global regulatory momentum and rising retail demand, Japan appears to be reversing course.

Following the U.S. Lead on Crypto Reform

Japan’s pivot seems to echo the recent U.S. shift toward a more pro-crypto stance under President Donald Trump.

Trump’s reelection in 2024 catalyzed a broader policy change across the United States, with crypto ETFs gaining approval and restrictions on banks interacting with digital assets being relaxed.

That momentum is having ripple effects internationally. In East Asia, South Korea—once wary of crypto ETFs—is now reconsidering earlier bans and restrictions.

While Japan’s move is still in the early stages, the combination of regulatory clarity and tax relief could make it one of the most crypto-friendly major economies in the world.