Key Takeaways
- Japan's FSA has proposed reclassifying bitcoin under the FIEA, allowing Bitcoin ETFs and enhanced investor protections.
- The proposed tax reform would lower bitcoin gains tax from up to 55% to a flat 20%, matching stock capital gains rates.
- The reforms aim to reverse capital outflows like Metaplanet's US move and position Japan as a global bitcoin investment hub.
Japan is on the verge of a significant regulatory transformation for its bitcoin market.
On June 24, the Financial Services Agency (FSA) formally proposed reclassifying bitcoin and other digital assets under the Financial Instruments and Exchange Act (FIEA).
If enacted, this move would clear the way for Bitcoin ETFs to launch in Japan and reduce the maximum tax rate on bitcoin gains from 55% to a flat 20%, bringing it in line with capital gains taxes on stocks.
Current rules
Currently, bitcoin is regulated under the Payment Services Act, limiting its classification to digital payment methods.
Transitioning to the FIEA would redefine bitcoin as a “financial product,” enabling new investor protections and providing the legal framework for listing bitcoin ETFs on domestic exchanges.
Local media reported:
“[The FSA aims to] strengthen investor protection and market transparency while encouraging broader participation by both institutional and retail investors.”
Reform proposal
The tax reform proposal is seen as a major step to attract high-net-worth individuals and institutions.
Companies like Metaplanet have previously shifted capital to the US for more favorable regulatory and tax treatment.
As noted in their recent filings, the US offers “optimal conditions for efficient and large-scale Bitcoin acquisition and management.”
The FSA’s initiative aligns with Japan’s “New Capitalism” strategy, which seeks to develop Web3 infrastructure and position the nation as a global hub for alternative investments.
Observers note that pro-bitcoin developments in the US, such as clear ETF regulations and state-level support, have influenced this shift.
