Japan: Bitcoin ETFs as Securities and Tax Cuts Planned

Japan's Financial Services Agency (FSA) is considering lifting the ban on Exchange Traded Funds (ETFs) and reducing the tax burden on cryptocurrency-related transactions.

This initiative aims to classify digital assets as financial securities, encouraging greater investor interest and boosting the adoption of cryptocurrencies in Japan's financial system.

According to media reports, Japan is conducting closed-door meetings with industry experts to discuss regulatory changes and market expansion. In particular, the FSA wants to understand whether the current regulatory framework can adapt to the growing popularity of cryptocurrencies.

The media have reported:

"The aim is to protect investors by requiring companies to disclose more detailed information."

仮想通貨、有価証券に準ずる開示規制に 金融庁検討 - 日本経済新聞

金融庁が暗号資産（仮想通貨）を有価証券に並ぶ金融商品として位置づける方向で検討に入ったことがわかった。仮想通貨で運用する上場投資信託（ETF）の解禁を視野に活用の促進にもつなげる。金融庁は現在、有識者との非公開の勉強会で、仮想通貨に関する現状の規制が十分かどうかを検証している。この勉強会での成果を基に、6月中に制度改正の方向性を公表し、

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The FSA plans to introduce the reforms by June 2025, while legislative changes could be presented in the 2026 session of the National People's Congress. This development is part of Japan's efforts to integrate digital assets into the financial system while ensuring compliance and transparency.

Another significant change concerns the reduction of taxation on crypto profits. Currently, cryptocurrency transactions are taxed at 55 per cent, but this is expected to be reduced to 20 per cent, in line with capital gains taxes on other financial products, such as equities.

The approval of Bitcoin ETFs will allow investors to participate in the market more safely. Hay Insights observed that Japan's financial sector lags behind markets such as the US and Canada in ETF adoption:

"These financial instruments [Bitcoin ETFs] have gained popularity in markets such as the US and Canada, where regulators have approved spot and futures-based ETFs. However, Japan's approach remains cautious, reflecting its strict regulatory framework."

Bitcoin ETFs in Japan: Current Status, Challenges, and Future Prospects 2024 ‣ HayInsights

Discover the status of Bitcoin ETFs in Japan, including regulatory challenges, corporate initiatives, and future prospects.

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Industry analysts believe that new regulations and more favourable taxation will attract more investors, strengthening Japan's position as a global cryptocurrency hub.

Recently, the FSA has warned well-known cryptocurrency exchanges, such as Bitget, Bybit and KuCoin, about unregistered operations in the country. The government has flagged concerns about unauthorised trading platforms and called on app stores to remove such apps, intensifying the crackdown on unregulated crypto activity.

In addition, Japanese lawmakers are considering the creation of Bitcoin reserves and the implementation of a policy similar to the 'DOGE policy' adopted by the US government.

In summary, the expected approval of the Bitcoin ETFs and the reduction of cryptocurrency taxes represent a turning point for the Japanese ecosystem. If implemented, these measures could solidify Japan as one of the leading cryptocurrency jurisdictions, fostering greater adoption and interest in the community.