Japan is considering lifting the ban on Bitcoin ETFs, significantly reducing Cryptocurrency income tax.

Gate News bot message, according to Coinpost, reported that the Japanese government is considering a major revision of the current Cryptocurrency regulatory guidelines based on a proposal by the Financial Services Agency (FSA) on Tuesday.

If the proposal is approved, it may lead to a series of changes in the Japanese Crypto Assets industry, including the possible lifting of restrictions on Bitcoin exchange-traded funds (ETFs).

The Financial Services Agency of Japan will hold a plenary meeting on Wednesday to discuss proposed reforms, with a major focus on moving Crypto Assets from the current Payment Services Act framework to the Financial Instruments and Exchange Act (FIEA).

In addition to referring to encryption assets as "Financial Products", the system change will also pave the way for the establishment of a dedicated working group to regulate the industry.

Other key reforms include significant tax cuts, reducing the current progressive tax system (with a maximum tax rate of 55%) to a self-declaration tax framework (with a tax rate of around 20%).

Japan is planning to move towards a more progressive digital asset regulatory framework, at a time when countries are generally pushing for more friendly rules, especially in the United States, aimed at promoting innovation, adoption, and financial inclusion.

Regulating according to FIEA will make Japan's Cryptocurrency tax equivalent to the stock market tax, which may lift the ban on Bitcoin ETF and support institutional interest in digital assets.

Customer protection remains the top priority of the Japan Financial Service Agency, and the shift to the "Foreign Investment Act" (FIEA) may strengthen its framework. Japan, known for its positive outlook on encryption assets, is committed to realizing its goal of becoming an investment-oriented country. This will be supported by creating new opportunities for citizens on major Web3 platforms and decentralized finance (DeFi) platforms.

According to the data from Statista, the revenue of the encryption market in Japan is expected to reach 20 billion dollars by the end of 2025, with a compound annual growth rate (CAGR) of 3.44% from 2025 to 2026.

Statista also predicts that by 2026, the number of Crypto Assets users in Japan will grow to 18.69 million, highlighting the necessity of a progressive regulatory environment.