Japan’s Financial Services Agency proposes a flat 20% virtual currency tax, abolishing the 55% “miscellaneous income” category

Japan plans to classify virtual currencies as financial instruments under the Financial Instruments and Exchange Act (Financial Instruments and Exchange Act). In addition to this, we also plan to introduce a new tax regime for this sector as part of the crypto reform process.

Japan’s Financial Services Agency (FSA) wants to reclassify 105 cryptocurrencies, including Bitcoin (BTC) and Ethereum (ETH), under the FIEA, effectively bringing them under the same umbrella as stocks and bonds, according to articles published in local media.

The extension of this regulation to cryptocurrencies is intended to ensure that this sector is subject to investor protection rules and held to higher standards.

JUST IN: 🇯🇵 Japan’s Financial Services Agency plans to classify virtual currencies as financial products and reduce the tax rate from 55% to a flat 20%. pic.twitter.com/MRUfrjLMYI

— Whale Insider (@WhaleInsider) November 17, 2025

According to the proposed rules, cryptocurrencies such as BTC and ETH listed on domestic exchanges will have to follow strict protocols regarding disclosure agreements. Japanese exchanges must clearly disclose each token’s issuer, blockchain infrastructure, and past price volatility.

Read more: Top 20 cryptocurrencies to buy in 2025

CZ says Japan’s virtual currency tax cut is a “great step”

Since the news broke, Binance co-founder Zhao Changpeng, known as the CZ of the crypto world, has praised Japan’s tax cuts. In a post about X, he said, “Lower fees = more economic growth.”

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

This is a great step for Japan. 👏

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

— CZ 🔶 BNB (@cz_binance) November 17, 2025

His support will also encourage more people and businesses to invest in Japan’s growing cryptocurrency market.

Japan’s interest in cryptocurrencies began to gain traction under former Prime Minister Shigeru Ishiba, who saw digital currencies as a way for Japan to address long-standing economic challenges.

New Prime Minister Sanae Takaichi supports new technology and plans to continue steering Japan towards the adoption of cryptocurrencies.

Explore: 9+ Best High-Risk, High-Return Cryptocurrencies to Buy in 2025

Japan’s virtual currency reform: Financial Services Agency promotes 20% flat rate tax rate, same as TradFi

Japan was one of the first countries to adopt cryptocurrencies and, by extension, their regulation, and recent years have seen some major regulatory advances domestically regarding cryptocurrencies.

Meanwhile, the country’s tax system remains rigid, and major cracks in its armor have at times stifled participation by retailers and institutions. And as the country wants to integrate cryptocurrencies into the broader financial ecosystem, the lack of a more friendly tax system is doing more harm than good.

Currently, virtual currencies are classified as miscellaneous income in Japan, which is often a problem for wealthy people who have to collect about 55% of their income in taxes. This tax rate for crypto investors is one of the highest in the world.

🇯🇵 Japan is accelerating in the field of virtual currency

The Financial Services Agency has indicated that it will “prioritize” 105 virtual currencies that will be subject to future regulations as “financial products” under the Financial Instruments and Exchange Act.

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

— EmanuCt_96 (@EmanuCt96) November 16, 2025

Thankfully, there is some respite in sight as the Financial Services Agency is pushing to impose a flat 20% tax rate on virtual currency profits, making it comparable to traditional financial products such as stocks and bonds. The idea first came up in June last year, when the Financial Services Agency released a document calling for changes to the way cryptocurrencies are regulated in the country.

Additionally, the Financial Services Agency wants to crack down on insider trading, prohibit trading based on personal information, and introduce penalties for those who violate the rules.

Regulators will prepare a proposal in the meantime for consideration in Japan’s parliament in 2026.

Explore: The Next 1000x Crypto – Introducing 10+ Crypto Tokens That Could Hit 1000x This Year

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