Japan’s ruling Liberal Democratic Party (LDP) is advancing a regulatory overhaul that could significantly reshape the country’s crypto landscape. The proposed reforms aim to cut the capital gains tax on cryptocurrency to 20% and officially classify digital assets as a distinct asset class.
LDP lawmaker Akira Shiizaki confirmed that under the new framework, cryptocurrencies would no longer be categorised as securities under the Financial Instruments and Exchange Act.
Tax Breaks for Crypto Trading and Swaps
The LDP’s proposal extends beyond capital gains tax cuts. It also seeks to equalise the tax treatment of cryptocurrency derivatives trading with spot investments. Another key change is the deferral of taxes on crypto-to-crypto swaps. Instead of taxing each swap, the government would only impose taxes when crypto is converted into fiat currency.
These moves indicate a shift in Japan’s stance on digital assets. Historically, the country has taken a cautious regulatory approach, balancing innovation with consumer protection. However, with Japan reducing its reliance on US debt assets, the government appears to be warming up to crypto investment.
Japan Considers Strategic Bitcoin Reserves
In a separate push for crypto adoption, Japanese lawmaker Satoshi Hamada urged the government in December 2024 to study the United States’ approach to Bitcoin reserves. He proposed that Japan convert part of its foreign currency reserves into BTC to maintain global competitiveness.
However, Prime Minister Shigeru Ishiba dismissed the idea, stating that Japan lacks sufficient insight into US Bitcoin policies to make such a decision.
While Japan is opening up to crypto-friendly policies, its regulators remain firm on compliance. In February 2025, the Financial Services Agency (FSA) called on Google and Apple to suspend unregistered crypto exchange apps until the platforms comply with Japanese regulations.
Japan’s commitment to crypto tax reform has been ongoing since the government passed an economic stimulus bill in November 2024. The LDP has set a deadline of March 31, 2025, for public input on its proposed crypto reforms, signaling that regulatory clarity is on the horizon.
