Japan’s financial regulator proposed exempting transactions involving stablecoins issued through trust structures from certain reporting requirements as part of tax reforms planned for fiscal 2027.
Japan’s Financial Services Agency (FSA) included changes to the tax treatment of so-called trust-based stablecoins among its key tax reform proposals for fiscal 2027. The agency proposed eliminating the requirement to submit certain reports related to changes in the beneficiaries of these instruments.
Trust-based stablecoins are fiat-pegged digital payment instruments issued against funds placed under the management of a trust entity, such as a trust bank.
The current reporting framework for trust-based stablecoins doesn’t account for how these assets circulate. They’re designed for frequent transfers among an unspecified number of users, while trustees can’t obtain information about every new holder or track changes in beneficiaries. In addition, the model itself doesn’t provide for users to earn income from holding stablecoins. As a result, complying with statutory requirements to report information on every change in beneficiaries is difficult in practice.
The issue stems from existing tax rules. Under inheritance tax law, when a trust is established or its beneficiaries change, the trustee must file a report with the tax authority containing information about the beneficiaries and the value of the trust property. Income tax law also requires trustees to submit trust statements containing information about beneficiaries, income, and expenses attributable to the trust property. The FSA proposed eliminating these reporting requirements for trusts underlying stablecoins, while allowing for other necessary changes to the framework.
The trust-based stablecoin initiative is part of the FSA’s broader package of tax proposals for fiscal 2027. The regulator also proposed adjusting the tax treatment of certain trust-based stablecoins issued outside Japan if they’re recognized as electronic payment instruments.
Japan’s government recently changed its approach to crypto-asset regulation and approved new requirements for foreign stablecoins and electronic payment instrument service providers.
