Japan is at the cusp of a landmark regulatory shift, potentially reshaping the playing field for crypto market participants.
Amid tough regulations in the country, crypto firms such as Metaplanet have been looking outward, but planned reforms could mean a paradigm shift.
Japan Eyes Regulatory Overhaul to Unlock Bitcoin ETFs and Tax Reform
On June 24, the country’s Financial Services Agency (FSA) released a formal proposal. It aims to reclassify crypto assets under the Financial Instruments and Exchange Act (FIEA).
If adopted, this change could pave the way for Bitcoin ETFs (exchange-traded funds) in Japan. The proposal could also reduce the tax burden on crypto investors from a maximum of 55% to a flat 20%. Such a move would align digital asset gains with stock investments.
Local media reports that the proposal will be deliberated at the Financial System Council meeting on June 25. It is one of the most serious efforts yet to align Japan’s crypto regulations with those of mature financial markets.
Currently, crypto assets in Japan are regulated under the Payment Services Act, limiting their treatment to digital payment methods. The proposed transition to FIEA would officially define cryptocurrencies as “financial products.”
It would also open them up to enhanced investor protections. Among them is creating the regulatory framework necessary to list Bitcoin ETFs on Japanese exchanges.
“[the FSA aims to] strengthen investor protection and market transparency while encouraging broader participation by both institutional and retail investors,” local media reported.
This is a sharp pivot away from Japan’s historically cautious stance. It is also part of a broader national strategy to become an investment-driven economy.
Tax Reform Could Accelerate Institutional Adoption
One of the proposal’s most consequential elements is the shift from progressive taxation to a flat 20% tax rate on crypto gains. Notably, such a rate would mirror the capital gains tax on traditional equities.
This change could dramatically increase domestic participation, especially from high-net-worth individuals and institutions deterred by Japan’s steep tax regime.
Indeed, tax burdens may already be driving capital migration overseas. BeInCrypto reported that Tokyo-listed Metaplanet recently announced a $5 billion capital injection into its US-based subsidiary to execute Bitcoin purchases.
Some analysts believe Japan’s unfavorable crypto regulations partly influenced the move.
“Metaplanet is moving beyond Japan’s limited capital markets and regulatory frameworks…Japan will be the R&D center, while the US becomes another capital aggregation and BTC acquisition engine,” wrote Adam Livingstone in a post.
In the same tone, Metaplanet’s filing indicated that “the United States, as the world’s preeminent financial center, offers optimal conditions for efficient and large-scale Bitcoin acquisition and management.
This suggests moving into the US provides superior capital market access and better legal clarity on Bitcoin. A tax change at home could reverse that trend. It may give companies like Metaplanet more reason to scale their crypto operations domestically.
Japan’s government is positioning crypto assets as a strategic pillar in its “New Capitalism” initiative, detailed in the 2025 revised Grand Design and Action Plan. This blueprint calls for developing full-scale Web3 infrastructure, supporting NFTs, and turning Japan into a global hub for alternative investments.
The FSA’s proposal also reflects geopolitical influences. Officials reportedly observe pro-crypto developments in the US, including regulatory clarity from states like Texas and the Trump administration’s supportive stance toward Bitcoin.
BeInCrypto reported that Bitcoin investments in Japan have surged as investors hedge against yen devaluation. A shift to FIEA and friendlier tax rules would only amplify that momentum, potentially leading to a domestic Bitcoin ETF market, long sought after by institutions and retail investors.
If approved, this system overhaul would mark a historic turning point, signaling Japan’s transition from a regulatory gatekeeper to a global champion of crypto utilization.
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