Japan’s Financial Services Agency (FSA) is taking a major step towards fostering greater adoption of digital assets. The agency plans to implement a 20% flat tax rate on crypto gains in the upcoming fiscal year (2026), aligning with stock market capital gains rates. This move signals a significant shift in how cryptocurrencies are viewed within the Japanese financial landscape, paving the way for the development of exchange-traded funds (ETFs). The agency’s intention is to classify crypto assets as financial products under the Financial Instruments and Exchange Act, which will allow for the creation of regulated ETFs. 2026 legislation also includes a proposal for tax reforms on cryptocurrency income, reducing the burden on investors while simultaneously creating new opportunities for investment in the digital asset space. The FSA is also working to approve Japan’s first yen-pegged stablecoin, expected to launch later this fall, offering a reliable and readily available on-chain currency linked directly to the Japanese Yen.