Japan’s FSA Proposes 20% Flat Crypto Tax, Doing Away With The 55% “Miscellaneous Income” Category

Japan is all set to classify cryptocurrencies as financial products under the Financial Instruments and Exchange Act (FIEA). Further to this, it also plans to introduce a new taxation regime for this sector as part of its crypto reform process.

According to an article published by a local media, Japan’s Financial Services Agency (FSA) wants to reclassify 105 cryptocurrencies, including Bitcoin (BTC) and Ethereum (ETH), under the FIEA, effectively putting crypto under the same umbrella as stocks and bonds.

This expansion of the regulatory umbrella onto crypto aims to ensure that the sector falls under investor protection rules and is held up to a higher standard.

JUST IN: Japan’s FSA plans to classify crypto as financial products, and cut the tax rate from 55% to a flat 20%. pic.twitter.com/MRUfrjLMYI

— Whale Insider (@WhaleInsider) November 17, 2025

As per the proposed rules, cryptocurrencies like BTC and ETH, listed on domestic exchanges, will need to follow strict protocols regarding disclosure agreements. Exchanges in Japan must clearly disclose each token’s issuer, blockchain infrastructure, and historical price volatility.

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Japan’s Crypto Tax Cut A “Great Step” Says CZ

Since the news broke, Binance Co-Founder Changpeng Zhao, known as CZ in the crypto world, has praised Japan’s tax cut. In a post on X, he said, “Lower fees = more economic growth.”

His support is a big deal. As one of the most influential voices in the crypto community, his endorsement means that Japan has likely become an attractive destination for crypto investors to park their funds.

Great step for Japan.

Lower “fees” = more economic growth. pic.twitter.com/aPU7P5i98k

— CZ BNB (@cz_binance) November 17, 2025

Also, his backing will likely encourage more people and companies to invest in Japan’s growing crypto market.

Japan’s interest in crypto started gaining traction under Former Prime Minister Shigeru Ishiba, who saw digital currencies as a means by which Japan could tackle its long-standing economic challenges.

The new Prime Minister, Sanae Takaichi, supports new technologies and plans to continue steering Japan toward crypto adoption.

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Japan Crypto Reform: FSA Pushes For A 20% Flat Tax Rate, On Par With TradFi

Japan has been one of the earlier adopters of crypto, and by extension, its regulations, and in recent years, there have been some major regulatory breakthroughs in the country regarding crypto.

Meanwhile, the tax regime in the country has remained as rigid as ever, a glaring chink in its armour that has at times stifled retail and institutional participation. And, since the country wants to integrate crypto within its broader financial ecosystem, a lack of a friendlier taxation regime is doing it more harm than good.

Currently, cryptocurrencies in Japan are categorized under miscellaneous income, which often becomes a cause for concern for high-net-worth individuals who then have to fork up about 55% of their income in tax. This taxation rate, directed towards crypto investors, is one of the highest in the world.

Japan is accelerating on crypto

The Financial Services Agency has indicated that 105 cryptocurrencies will be “prioritized” for future regulation as “financial products” under the Financial Instruments and Exchange Act.

And among these 105 alongside $BTC, $ETH, and $XRP… pic.twitter.com/25JME0YVKX

— EmanuCt_96 (@EmanuCt96) November 16, 2025

Thankfully, respite is in sight as the FSA is pushing for a flat 20% tax rate on crypto gains, bringing it on par with traditional financial instruments such as stocks and bonds. This idea first came up in June last year when the FSA released a document calling for a shift in how crypto is regulated in the country.

Additionally, the FSA wants to crack down on insider trading, banning trades based on private information and introducing penalties for those who break the rules.

Regulators will prepare the proposal in the meantime, for Japan’s parliament to debate it in 2026.

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Key Takeaways

Japan plans to reclassify crypto as financial products under stricter investor protection rules
Proposed crypto tax reform aims to replace 55% income tax in Japan with a flat 20% capital gains rate
Binance Co-Founder CZ endorsed Japan’s crypto tax cut, calling it a “Great Step For Japan”

The post Japan’s FSA Proposes 20% Flat Crypto Tax, Doing Away With The 55% “Miscellaneous Income” Category appeared first on 99Bitcoins.

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