Japan’s market regulator is preparing to propose a revision to the nation’s tax code, potentially opening the door for domestic cryptocurrency exchange-traded funds, according to a report dated Friday.
Major Crypto Tax Reform On The Cards?
The Financial Services Agency is planning to request a review of the tax treatment of cryptocurrencies, or virtual currency, for the 2026 fiscal year, Nikkei reported.
The proposal, expected by the end of August, includes shifting cryptocurrency gains to a separate tax category with a flat 20% tax rate, similar to regular capital gains taxes. This is a major shift from the current system, where cryptocurrency income is treated as “miscellaneous income” and taxed up to 55%.
Bitcoin, Ethereum Spot ETFs Soon?
Additionally, the FSA is planning a 2026 legislative bill to categorize cryptocurrency as a “financial product” under the Financial Instruments and Exchange Act, rather than a “means of payment” under the Payment Services Act.
Reclassifying cryptocurrency as a financial product could clear the regulatory path for cryptocurrency ETFs, like those tied to Bitcoin (CRYPTO: BTC) and Ethereum (CRYPTO: ETH), in the country.
This proposal comes at a time when Japan is taking significant strides in the cryptocurrency space.
The FSA told Benzinga last week that JPYC Inc., a stablecoin issuing company, has been authorized to issue the first-ever yen-backed stablecoins. The stablecoin is set to be deployed on Ethereum (CRYPTO: ETH), Avalanche (CRYPTO: AVAX) and Polygon (CRYPTO: POL).
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Disclaimer: This content was partially produced with the help of Benzinga Neuro and was reviewed and published by Benzinga editors.
