The Japanese Cabinet officially approved a milestone bill that marks a fundamental shift in the country’s crypto regulatory framework. This bill redefines the legal status of cryptocurrencies from a means of settlement under the Payment Services Act to formal financial assets under the Financial Instruments and Transactions Act.

This legal adjustment not only reflects the current market situation, with 7.3 million active accounts, but also removes institutional barriers for future tax reforms and market access. Previously, Japan imposed a maximum marginal income tax rate of 55% on crypto gains. The new law introduces a uniform 20% tax rate for specific assets, aiming to align Japan’s regulatory framework with the EU’s MiCA standards, thereby enhancing the international credibility of the local market and attracting cross-border capital.

According to calculations, for a trader earning a profit of 10 million yen, the new tax system would increase their after-tax income by 3.5 million yen. However, this benefit applies only to 105 specific cryptocurrencies that meet strict eligibility criteria.