Crypto Regulations in Japan 2025

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After years of unregulated crypto use, Japan became the first economy to formally recognize Bitcoin as a legal payment method through the Payment Services Act (PSA) 2017. As of 2025, Japan has developed one of the most comprehensive and proactive regulatory frameworks for cryptocurrency. 

Currently, Japan is actively working on classifying crypto assets as financial instruments, bringing them under stricter financial regulations by 2026. 

Crypto Regulations in Japan

August 21, 2025 – FSA Tax Reform Proposal 

• The Financial Services Agency (FSA) is proposing to bring crypto under that same 20% bracket and let investors carry forward losses for three years.

• The proposal is meant to cut the burden on traders, boost market activity, and rebuild trust.

June 25, 2025 – 55th Financial System Council (FSC) Meeting 

• The key discussion was to reclassify certain digital assets under FIEA, especially those with investment-like features. Additionally, tokens are classified in the same category as securities. 

• It introduced mandatory disclosure for token issuers, insider trading, market conduct regulations, and clarity in legal frameworks for crypto ETFs, including spot bitcoin products.  

March 2025- Proposal for Reformation in Crypto Brokerage and Stabecoin Laws

• Japanese Cabinet Minister approved a proposal to reform the laws, allowing cryptocurrency companies to operate as an ‘intermediary business.’ 

• The new bill provides flexibility to stablecoin issuers to back their tokens with various types of assets. 

• Crypto brokerage will no longer be subject to financial regulations or anti-money laundering (AML) regulations. 

Timeline of Major Crypto Regulations in Japan

Date Law/ RegulationKey Provisions December 20, 2024Crypto Tax ReformationShifting from a progressive rate of 55% to a flat 20% tax June 1, 2023Crypto Travel Rule Mandatory sender/ receiver info for crypto transferMay 1, 2020PSA &FIEA Amendments New AML, cybersecurity, and security token regulationJune 7, 2019AML/ Custody Rules Stricter KYC, record keeping, and annual compliance reportApril 1, 2017PSA Enforcement Regulating crypto with the Financial Services Agency (FSA) registration2016PSA and Fund Settlement Law AmendmentCryptocurrency is recognized as legal tender  What is the Japanese Government’s Stance on Cryptocurrency in 2025?

Currently, the government is proactively developing its regulatory framework to enhance security and facilitate the crypto market. Key focuses are:

• Japan’s Finance Minister, Katsunobu Kato, announced that Japan will review crypto tax by the end of June 2025; possibilities of a new tax regime indicated. 

• The Democratic Party’s Web3 Project Team has put forward a proposal for crypto classification under the Financial Instruments and Exchange Act (FIEA). 

• The government aims to increase the cashless economy to 40% by 2025 with blockchain development. 

• Japan aims to become a crypto leader with a focus on legal registration of crypto exchanges and platforms, market integrity, investor protection, and anti-money laundering. 

Crypto Tax in Japan 2025

Is crypto taxed in Japan? Yes, cryptocurrency is taxed as ‘miscellaneous income’ with a progressive income tax rate. There is no capital gains tax enacted yet in Japan. 

What falls under miscellaneous income?

• Selling crypto for fiat currency

• Exchange crypto for crypto 

• Buying goods and services with crypto 

• Gifting and payment in crypto 

• Earning staking rewards from liquidity pools

• Receiving coins from forks

• Mining, Airdrops, DeFi, and Referral bonus 

On March 6, Japan proposed a crypto tax cut from a progressive rate of up to 55% to a flat 20% on crypto tax gains. However, the bill has not been passed yet to implement the tax reduction. FSA is expected to review this reclassification; if approved, it will likely take effect from 2026. 

Tax type Tax rate Note Income tax 5% to 45%Depends on the individual’s total incomeAdditional inhabitant tax10%Resulting in 15% to 55% tax rateCapital gains tax (CGT)Not specified yetCrypto as a financial product Reclassification of CGT20% for stock profitsNot enacted yet Crypt License in Japan

Under the Payment Services Act (PSA), the Financial Services Agency (FSA) is the key body regulating mandatory crypto licenses. How to get a crypto license in Japan?

1. Crypto exchanges and platforms are required to register with the FSA to provide crypto asset exchange services (CAES).

2. Crypto companies need to establish a local entity, typically a Kabushiki Kaisha, a joint stock company. 

3. A minimum capital of over 10 million yen is required; other fees depend on the license and business model.

4. A physical office in Japan is mandatory with a Japanese bank account. 

5. Experts are required to follow strict AM and CFT regulations. 

Crypto Adoption in Japan

• Penetration Rate: Japan has experienced a positive increase in crypto adoption rate, with current penetration projected to be 14.70% in 2025 and is expected to reach even higher, up to 15.26% by 2026. The number of crypto users in Japan is expected to increase up to 18.69 million by 2026. 

• Crypto Revenue: Current revenue in the crypto market is expected to reach US$2.0 billion in 2025, with an anticipated growth rate of 3.44% resulting in a total amount of US$2.0 billion by 2026. 

• Crypto Holdings: It is not publicly known whether the Japanese government holds any crypto assets; rather focuses on increasing the adoption rate with a modern regulatory framework. 

Conclusion

In Japan, the government’s crypto holdings is not publicly known; however, public companies like Metaplanet are known to be one of the biggest crypto holders in Japan. The country has several new proposals in hand that are waiting for review and will likely take effect from 2026. As of 2025, Japan’s regulatory framework has reflected positive results with solid earnings and enhanced protection measures for investors.

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