Japan’s Financial Services Agency (FSA) is preparing a landmark reform for cryptocurrency taxation and regulation. The plan would lower the tax on gains from leading digital assets to a flat 20% rate and officially recognize 105 major exchange-listed tokens as full “financial products” under Japanese law.

What the reform entails

The package targets assets such as Bitcoin and Ethereum, moving them out of the current “miscellaneous income” category, which taxes crypto profits alongside salaries and other income at progressive rates of up to 55%. By creating a dedicated capital-gains bucket with a flat 20% rate, Japan aims to provide clarity and reduce tax friction for serious traders while leaving speculative coins under existing rules.

The role of domestic exchanges

Registered domestic exchanges will become the official gateways to the new tax regime and financial-product classification. Only assets listed on these platforms will qualify for the 105-token set, and exchanges will need to enhance screening, governance checks, and ongoing monitoring. The measure signals stricter oversight for high-quality projects while limiting hype-driven or unvetted tokens.

Bridging to mainstream finance

The reform also opens doors for banks and insurers to offer approved digital assets alongside traditional investments. Regulated institutions may, under tight capital and risk rules, provide exposure to Bitcoin and other top tokens, increasing mainstream accessibility and integrating crypto more closely with Japan’s financial system.

Implications for investors

For investors, the changes create a clearer and safer framework. Approved tokens benefit from predictable taxation and institutional oversight, which could encourage onshore trading and reduce the incentive to seek offshore alternatives. Smaller or less established coins will continue under the old, more punitive rules.