Japan Financial Services Agency seeks to revise stablecoin tax rule

Japan’s financial regulator is tired of paperwork. The Financial Services Agency proposed tax reform measures for fiscal year 2027 that would exempt trustees from mandatory reporting every time a stablecoin changes hands, removing what has quietly become one of the biggest friction points in the country’s digital payments infrastructure.

The current system requires documentation for each beneficiary change that occurs when a trust-type stablecoin is transferred. For an asset designed to move quickly and frequently, that’s a bit like requiring a notarized letter every time you hand someone a dollar bill.

What the FSA actually wants to change

The proposal, submitted as part of the FSA’s FY2027 tax reform requests, targets a specific category of stablecoins known in Japanese regulation as “特定信託受益権,” or specified trust beneficiary rights. These are stablecoins issued by trust banks, where each token represents a beneficial interest in assets held in trust.

Beyond the reporting exemption, the reform package also takes aim at a de facto ceiling of 1 million yen (roughly $6,700 at current rates) on personal-use stablecoin transactions. Removing that threshold would open the door to using stablecoins for significantly larger purchases, think vehicles or real estate deposits, rather than limiting them to small retail payments.

The regulatory backdrop

These proposals didn’t emerge from nowhere. Japan amended its Payment Services Act in 2023, creating a distinct regulatory framework that separates stablecoins from crypto assets. Under that framework, stablecoins issued by trust banks are classified as “electronic payment instruments” rather than crypto assets, giving them a different legal and tax treatment.

One concrete example of this category is JPYSC, a yen-denominated stablecoin issued by SBI Shinkin Trust Bank. The FSA’s reform request also addresses foreign-issued trust-type stablecoins that have been recognized under the Payment Services Act as electronic payment instruments, with the proposal seeking to align their tax treatment with domestic counterparts.