Japan is planning a big change in how it regulates cryptocurrencies. On June 24, the Financial Services Agency (FSA) released a proposal to bring crypto assets under the Financial Instruments and Exchange Act (FIEA). Such a step will be followed by possible approval of Bitcoin exchange-traded funds (ETFs) and reduced crypto gain taxes.

Currently, crypto assets in Japan are subject to the Payment Services Act. However, in the new scheme, they would be approached as financial products under the FIEA. The Financial System Council will examine this proposal at the meeting on June 25. In case it is accepted, the new regulation will set the pattern of implementation of the crypto regulation strategy in Japan.

Change in taxation is one of the most significant. Currently, the capital gains in crypto are taxed on a progressive basis, which has a maximum rate of 55%. According to the new proposal, it is proposed to change the rates to a flat rate of 20% as applied to stocks. This would be of advantage to the numerous investors and motivate a larger number of people to invest in crypto assets.

Moreover, the new legislation would also probably give the chance to establish Bitcoin ETF in Japan. This would make it simpler to enable both institutional and retail investors to invest in cryptocurrencies by means of conventional monetary systems. Moreover, the system of investor protection would also get reinforced, thus contributing to the fact that crypto investments are safer and less opaque.

It is one of the initiatives that Japan is making to turn its economy into one that is investment driven. The government expects digital assets and Web3 technologies to become the means of prosperity and progress. As early as April 2025, the FSA made a move to categorize crypto assets into different sets in order to effectively control the burgeoning industry.

The Japanese government currently considers cryptocurrencies as an alternative investments. Unlike conventional investments such as stocks or bonds, these are also not considered as such since they are characterized by distinct risk and returns. Japan is looking forward to boosting the number of investors and having them in terms of their experiences in risk management by promoting crypto as a common means of investment.

The proposed changes align with Japan’s “Grand Design and Action Plan for New Capitalism,” updated in 2025. The plan clearly shows that Web3 and crypto businesses can solve social problems. In addition, the government plans to use NFTs to share local culture. As a result, Japan can expand its influence and boost productivity. This may create new markets in the region to the local industries and raise the digital impact of Japan.

Remarkably, the world trends add to this change. The Trump administration in the U.S., which came to power in January 2025, has expressed a positive attitude towards cryptocurrencies. Some states of the U.S., such as Texas, are trying to encourage the crypto industry. Japan appears to be on the same track.

In short, Japan has proposed a historic shift in crypto regulation under the FIEA. As a result, the country will ease restrictions and expand Web3 usage. This move will likely attract new investments and boost economic activity.