Japan’s Liberal Democracy Party (LDP), the ruling party in Japanese politics, is moving ahead with comprehensive regulatory reform on cryptocurrencies that would slash the capital gains tax on crypto to 20% and categorize digital assets as a distinct asset class.
According to LDP lawmaker Akira Shiizaki (Akihisa), cryptocurrencies will be categorized as a new asset class, separate from securities under the Financial Instruments and Exchange Act.
The LDP proposal also requested that cryptocurrency derivatives trading receive the same tax treatment as spot investments and moved to defer taxes on crypto-to-crypto swaps. Instead, the LDP proposed that taxes from crypto swaps be calculated all at once and charged only when the crypto is exchanged for fiat currency.
Source: Akira Shiizaki
These regulatory reforms signal that Japan is opening up to cryptocurrencies following a somewhat cautious approach to digital asset investment in the past, as the country shifts away from encouraging investment in US debt assets.
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Japan embraces innovation but with a cautious approach
The government of Japan has never been explicitly anti-crypto and has adopted a measured regulatory approach balancing innovation with consumer protection.
In November 2024, the government of Japan passed an economic stimulus bill and committed to crypto tax reform, which is currently ongoing, with the LDP requesting input on its crypto reforms until March 31, 2025.
Translated statement of LDP crypto tax proposal. Source: LDP Working Group
Japanese lawmaker Satoshi Hamada asked the legislature to study the potential adoption of a strategic Bitcoin (BTC) reserve in the United States in December 2024.
Hamada also asked Japan’s government to consider adopting a Bitcoin strategic reserve by converting a portion of its foreign currency reserves to BTC to remain competitive with the US.
However, Japanese Prime Minister Shigeru Ishiba later responded, saying that Japan does not have enough insight into the US Bitcoin movement to decide — throwing cold water on the proposal.
More recently, in February 2025, Japan’s Financial Services Agency (FSA) asked Google and Apple to suspend unregistered crypto exchange apps in the region until the exchanges registered with Japan’s regulatory authorities.
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