Japan Plans Major Crypto Tax Reforms, ETF Regulation Overhaul

Japan's Financial Services Agency (FSA) is proposing significant reforms to its cryptocurrency taxation and regulatory framework aimed at boosting crypto adoption. The key tax reform would reduce the tax rate on crypto gains from up to 55% to a flat 20%, aligning it with stocks and bonds, and allow investors to carry forward losses for three years, thereby encouraging greater market participation. Additionally, the FSA plans to reclassify cryptocurrencies as financial products under the Financial Instruments and Exchange Act, enabling stricter regulatory oversight including insider-trading rules and disclosure requirements, and paving the way for cryptocurrency exchange-traded funds (ETFs) such as spot Bitcoin funds. These reforms are expected to stimulate retail and institutional investment, increase payroll payments in crypto, and position Japan as a prominent player in the global crypto business banking sector. Meanwhile, India is also re-evaluating its crypto taxation and regulatory policies, with the Central Board of Direct Taxes (CBDT) consulting stakeholders on changes including the controversial 1% tax deducted at source (TDS) on crypto transactions. Indian industry leaders are advocating for lower TDS rates and the ability to offset losses against gains to prevent liquidity loss and curb offshore trading, while a more collaborative government approach and international influences, such as President Trump's pro-crypto stance, are driving momentum for reform.