Japan Advances Crypto Bill with 20% Tax Rate and ETF Pathway

Japan's lower house has approved a bill that reclassifies cryptocurrencies as financial instruments, paving the way for crypto exchange-traded funds (ETFs) and reducing tax rates on crypto gains to 20%. This move brings digital assets closer to traditional securities markets and aims to create a clearer regulatory framework. The proposed legislation would also introduce stricter insider trading rules and increase penalties for unregistered crypto sellers.

According to Bloomberg, the bill was approved on Thursday and is expected to move through the upper house before taking effect next year. Once implemented, the tax rate on crypto gains would be reduced from its current maximum of 55% to a flat 20%, matching stocks and bonds. The reforms are part of an effort to establish clearer rules for digital asset trading while responding to growing participation from institutions and retail investors.

Regulators have framed the reforms as a way to foster innovation by creating a sound trading environment, with officials seeking healthy market growth rather than endorsing crypto assets themselves. Local investors could gain access to crypto-linked ETFs, an investment product that has not yet been available in Japan. The proposal builds on earlier reforms approved this year, which formally reclassified crypto assets as financial instruments and introduced restrictions on insider trading.