Japan is looking more likely to make its tax laws more favorable to digital asset investors. It is proceeding with moves to introduce a flat 20% tax rate for capital gains on such investments, with the Financial Services Authority (FSA) requesting a review of definitions at the end of August.
The FSA also seeks legislation to classify digital assets as a “financial product” under the Financial Instruments and Exchange Act. They are currently defined as “payment methods” under Japanese law, which allows their use in daily life but tends to discourage trading—taxes can be 55% or more on gains since this income still falls under “miscellaneous income.”
These re-classifications and shuffling of definitions would mean digital assets are treated similarly to stocks. Some reports have indicated this would also open the door to local ETFs and give established companies more freedom to add digital assets to their portfolios.
Japan’s strict but open-minded approach to blockchain
Japan has historically taken an “interested, but tread carefully” approach to blockchain and digital assets. It received plenty of unwanted attention in 2014 as the headquarters for the infamous Mt. Gox Bitcoin exchange, but chose to form regulatory structures around the emerging industry rather than attempt to ban it outright. Japanese exchanges face strict reporting and inspection laws, although that hasn’t stopped numerous local platforms from suffering similar fates in the years since—the most recent one was DMM Bitcoin last year. Unlike Mt. Gox, subsequent compromised exchanges received bailouts and takeovers from other private investors, indicating enough interest in the space to make another Gox-type catastrophe less likely.
The official tone concerning digital assets has still improved in recent years. This is likely due to these assets’ growing popularity among local speculators and the mainstreaming of “crypto” discussions in places like the United States.
The country’s Finance Minister, Katsunobu Kato, even spoke at a blockchain event in Tokyo this month, indicating he saw digital assets as an appropriate component of a diversified investment portfolio. His speech came with the usual caveats about price volatility, but he noted that regulations needed to stay balanced to not undermine innovation.
Japan’s ruling Liberal Democratic Party, already reduced to minority government status after last year’s election, is probably looking at new ways to broaden its appeal among younger voters. The party, usually dominant in Japanese politics, saw its power slip further in 2025 when it also lost its majority in the upper house of the national parliament. This shift has seen emerging and minor parties gain influence. Moreover, Japan is continually looking for ways to keep its status as a global financial hub, and has historically shown interest in new technologies as part of this vision.
Could stablecoins help the economy?
A particular gripe among Japan’s exchange users has been a lack of access to stablecoins to move value in fiat currencies. There is currently no stablecoin denominated in Japanese yen (JPY); however, that may also change soon with moves to allow the private company JPYC to issue JPY 1 trillion (~US$6.8 billion) in its stablecoin of the same name over the next three years.
Following the examples of Tether and other stablecoin operators, JPYC has identified itself as a potential large customer for government debt. Some national governments and central banks have begun to view stablecoins as a more acceptable alternative to central bank digital currencies (CBDCs), a change to reinvigorate national currencies, and potentially help the economy by using digital asset technology to spur investment.
Watch | BSV is Open: Anyone Can Build, Mine, or Use
Source: https://coingeek.com/japan-plans-tax-changes-to-boost-digital-asset-investment/
