Japan loosens crypto ETF regulations

Japan’s Financial Services Agency (FSA) has announced revolutionary regulations that recognize cryptocurrencies as financial products. The new system will allow the launch of ETFs and will set the tax rate at 20 percent. With 12 million active accounts, Japan is set to become a global crypto hub. The change will affect the 5 trillion yen market.

The sweeping proposal, announced by Japan ’s regulator, aims to fundamentally change the country’s approach to cryptocurrencies. The 20% flat rate, which will replace the current 55% progressive tax system, aims to attract institutional investors. The move aligns with Japan’s aim to become a global crypto hub as part of its “New Capitalism” strategy.

Japan Opens Doors to Institutional Crypto Investment

The planned reclassification would recognize cryptocurrencies as “financial products” under the Financial Instruments and Exchange Act, which would apply the same framework that governs securities to cryptocurrencies.

The change could make crypto investment more attractive to both retail and institutional players. There are currently more than 12 million active local crypto accounts and assets held on the platforms exceed ¥5 trillion.

According to FSA statistics, crypto ownership has now surpassed participation in some traditional financial products, a trend that is particularly evident among tech-savvy individual investors.

The rise in institutional participation worldwide has also been cited as one of the drivers behind the proposal. The FSA noted that more than 1,200 financial institutions, including US pension funds and Goldman Sachs, hold US-listed spot Bitcoin ETFs.

In April, Sumitomo Mitsui Financial Group, TIS Inc., Ava Labs, and Fireblocks signed a Memorandum of Understanding to explore the commercialization of stablecoins. The collaboration will focus on the issuance of stablecoins pegged to both the US dollar and Japanese yen.

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