Japan's Financial Services Agency Calls for Tax Reforms on Crypto Assets, Proposes Separate Taxation and Encourages ETF Formation

On August 21, it was revealed that the Financial Services Agency (FSA) plans to request a revision of the taxation system for crypto asset (cryptocurrency) transactions in the 2026 fiscal year tax reform. The revision also aims to facilitate the formation of exchange-traded funds (ETFs) for Bitcoin and similar assets. According to reports by the Nikkei on the content of the requests to be finalized by the end of August, the FSA intends to advocate for the application of a 20% declared separate taxation, similar to that applied to listed stocks. Under the current system, gains from the sale of crypto assets are classified as 'miscellaneous income' and are combined with other income such as salaries, subjecting them to a progressive tax rate of up to 55% (including resident tax). This high tax rate has been a barrier for individual investors and startups...