Japan’s FSA eyes crypto reclassification under FIEA to lower capital gains tax to 20%

Japan’s Financial Services Agency considers reclassifying crypto assets as financial products under Financial Instruments and Exchange Act (FIEA), which would reduce capital gains tax on crypto to a flat 20%.

On June 24, Japan’s Financial Services Agency released a new policy proposal signaling a major regulatory transformation for cryptocurrencies, as initially reported by Coinpost.

In a document titled “Review of the Systems Surrounding Crypto Assets,” the FSA announced the formation of a working group to explore the possibility of shifting crypto regulation from the current Payment Services Act to the more stringent FIEA. The proposal is set to be discussed at the Financial System Council’s plenary session on June 25.

If approved, the change would introduce a flat capital gains tax rate of around 20% for crypto, putting it on par with stocks and easing the tax burden compared to the current tax regime, where rates can reach up to 55%.

Beyond tax relief, the proposal paves the way for potential domestic Bitcoin ETFs.

This move is integral to Japan’s broader strategy to bolster its status as an investment nation and promote growth in the Web3 and crypto sectors. As outlined in the government’s revised 2025 “New Capitalism Grand Design and Implementation Plan,” the responsible development of Web3 businesses can tackle societal challenges, boost productivity, and unlock global opportunities for Japanese cultural and regional assets.

Additionally, this potential regulatory shift also aligns with Japan’s ongoing efforts to refine how digital assets are classified and governed. In a separate but related move, the FSA recently introduced a draft framework dividing crypto assets into two categories based on their purpose and decentralization.

Type 1 tokens, which are issued for business or fundraising purposes, would face stricter disclosure rules to protect investors. In contrast, Type 2 assets like Bitcoin (BTC) and Ethereum (ETH), seen as decentralized and non-fundraising, would be monitored primarily through exchange oversight.

Meanwhile, Japan is rapidly advancing its digital financial ecosystem, with the digital yen pilot program—initiated in 2023—fully underway.