Japan Prepares New Crypto Rules to Open Doors for Bitcoin ETFs

• Japan plans to regulate crypto under FIEA, enabling Bitcoin ETFs and enhancing investor protection.
• Japan may cut crypto taxes to 20%, aiming to attract more institutional participation in digital finance.

New regulations are being drafted in Japan. But it’s not about cigarette taxes or import-export rules. This one is much more digital: crypto. The Financial Services Authority of Japan (FSA) has just submitted a proposal to place crypto assets under the legal umbrella of the Financial Instruments and Exchange Act (FIEA), rather than just being part of the Payment Services Act as it has been so far, according to Coinpost.

If approved, this move would open the door wide for the presence of Bitcoin ETFs in Japan—which has so far been elusive because the legal status of digital assets is still half-clear.

The proposal has not yet been passed, but its discussion at the Financial System Council of Japan has been scheduled. If it goes according to plan, the draft law will be brought to parliament next year. This means that this is not a seasonal discourse. There is a clear path, and the goals are quite ambitious.

Japan Looks to Reshape Crypto with Investor Rights and Tax Reform

This regulatory change is not just about giving the green light for Bitcoin ETFs. By entering the FIEA scene, crypto assets will be treated like traditional financial products. That means there will be mandatory disclosure of information, oversight of fraudulent practices such as insider trading, and stronger investor rights. For retail investors, it’s like moving up from playing in the city park to an official stadium.

On the other hand, this reform also includes an overhaul of the tax scheme. So far, profits from crypto have been subject to a progressive tax that can reach 55%.

It’s enough to make anyone think twice about taking profits. But if this new rule is implemented, the tax rate will be a flat 20%—in line with capital gains from stocks. Not only is it fairer, but it could also make Japan a friendlier place for blockchain-based financial innovation.

On the other hand, CNF previously reported in mid-June that Japanese financial institutions have quietly started shifting some funds to Bitcoin. Japan has more than $1.1 trillion in foreign exchange reserves, and around $8.7 trillion in pension funds and life insurance.

Even if only a small portion of those funds were shifted to BTC, the impact could be felt outside Japan. Park, the global analyst, said this move could be a global game changer, given Japan’s position on the world financial map.

Local Stablecoins Also Ready to Launch

Meanwhile, Japan’s domestic crypto sector is also continuing to grow. As we previously reported in April, Mitsubishi UFJ Trust and Banking Corporation (MUFG) entered the final stages of developing a regulated stablecoin. The stablecoin is pegged to the Japanese yen (JPY) and built on Progmat Coin, a digital platform designed for legal stablecoin issuance by financial institutions.

While the launch date is still uncertain, many expect it to be mid to late 2025, subject to approvals and integration with other financial systems. If all goes well, Japan could become the first major country to have an official, legal, yen-based stablecoin.