Japan and Uzbekistan Shift Their Approach to Cryptocurrency Regulation
Japan's Financial Services Agency is developing a framework to include cryptocurrencies in the Financial Instruments and Exchange Act. Uzbekistan, meanwhile, plans to create special mining zones with 10-year tax incentives.
Japan and Uzbekistan: different continents, a single vector for cryptocurrency legalization
Introduction
April 2026 will go down in crypto industry history as the month when two countries, separated by thousands of kilometers and sharing nothing in common geographically or economically, simultaneously took decisive steps toward digital assets. Japan—a technological giant with conservative financial regulation—and Uzbekistan—an agrarian Central Asian republic seeking ways to attract investment—almost synchronously announced a revision of their approaches to cryptocurrencies.
Japan's Financial Services Agency (FSA) has developed a framework to include cryptocurrencies in the Financial Instruments and Exchange Act (FIEA), effectively equating digital assets with securities. At the same time, Uzbek President Shavkat Mirziyoyev signed a decree to create a special mining zone, "Besqala Mining Valley," in the territory of Karakalpakstan with tax holidays until 2035.
What lies behind these actions—a crypto fad or pragmatic calculation? And why have two such different states arrived at the same conclusion about the need for legalization and regulation?
Event Details and Timeline
Japan: From Payment Method to Financial Instrument
On April 10, 2026, the Japanese Cabinet approved a bill to amend the Financial Instruments and Exchange Act (FIEA), which reclassifies cryptocurrencies by moving them from under the Payment Services Act into the realm of securities regulation.
Key changes include:
- Mandatory annual disclosure by cryptocurrency issuers (similar to public company reporting).
- A ban on insider trading with criminal liability (maximum penalty: 10 years in prison and a fine of up to 10 million yen).
- Increased penalties for unregistered exchanges: instead of 3 years, up to 10 years in prison.
- Amendments to the Limited Partnership Act (LPS): lifting the ban on direct ownership of crypto assets for venture funds.
At the same time, the government announced a reduction in the maximum tax rate on crypto profits from the current 55% to a flat rate of 20%, making cryptocurrency taxation similar to stock taxation. This change will take effect in 2028—the same year the first crypto ETFs are planned to launch on the Tokyo Stock Exchange.
Finance Minister Satsuki Katayama, commenting on the decision, stated that the goal is "to ensure fairness, transparency, and investor protection while expanding the supply of capital for growth."
Uzbekistan: The Entire Republic as a Mining Zone
On April 17, 2026, Uzbek President Shavkat Mirziyoyev signed a resolution to create a specialized zone, Besqala Mining Valley, across the entire territory of the Republic of Karakalpakstan. The document came into effect on April 20.
Key parameters of the new zone:
- Tax holidays for residents until January 1, 2035—full exemption from all taxes and fees on mining income.
- A monthly fee of 1% of mining income payable to the zone's directorate.
- Electricity usage from the unified power grid with a multiplier of 2 applied to the Group II tariff, as well as from renewable sources, including hydrogen power plants.
- Sale of mined assets permitted both on national crypto exchanges and on foreign platforms, including direct contracts.
- Mandatory repatriation of proceeds—all funds from cryptocurrency sales must be deposited into bank accounts in Uzbekistan.
To obtain resident status, a legal entity must be registered in Karakalpakstan and have an authorized capital of at least 5,000 basic calculation values—about 2.06 billion soums (approximately $170,800). The zone will be managed by a special directorate under the Council of Ministers of Karakalpakstan, and mining permits are issued by the National Agency for Advanced Projects.
Notably, the resolution also allows the use of excess heat from mining equipment to heat greenhouses on agricultural land—an unexpected symbiosis of high technology and the agricultural sector.
Impact and Significance
For the World: Two Poles of Regulation
The actions of Japan and Uzbekistan represent two fundamentally different models of cryptocurrency legalization, each of which could serve as a template for other countries.
Japanese Model: Integration into the Existing Financial System
Japan is essentially completing a 15-year cycle of cryptocurrency regulation that began after the collapse of Mt. Gox in 2014. By equating cryptocurrencies with securities, Tokyo addresses the key problem of "information asymmetry" between issuers and investors, which has held back institutional adoption for decades. As noted in the February 2026 report of the Financial System Research Council, the old regulatory regime simply no longer matched the scale and complexity of the modern market.
42% of global financial professionals cite regulatory uncertainty as the main barrier to allocating funds to cryptocurrencies. Japan has just removed that barrier domestically.
Uzbek Model: Attracting Investment Through Specialized Zones
Uzbekistan, on the other hand, uses cryptocurrencies as a tool for regional development. Karakalpakstan is one of the country's poorest regions: according to the UN Development Programme's 2025 data, it has high unemployment and low industrial activity. By creating a tax oasis for miners, Tashkent hopes to attract billions of dollars in investment, create jobs, and stimulate the development of renewable energy.
Of particular note is that foreign companies investing more than $100 million in crypto mining receive full exemption from taxes and duties until 2040. The government expects to attract over $1 billion in investment from artificial intelligence and data center projects alone.
For the Crypto Industry: An Institutional Breakthrough
For the industry, these events mean the following:
- Liquidity and Legitimacy. When the second-largest market in Asia (after China, which banned cryptocurrencies) and a fast-growing Central Asian market simultaneously liberalize regulation, it creates a powerful momentum for the entire sector.
- ETF Revolution in Asia. Japan plans to launch crypto ETFs by 2028, and analysts estimate a potential market of 1 trillion yen ($7.5 billion) in assets under management. This compares to the US market, where spot Bitcoin ETFs gathered over $50 billion in their first year.
- Tax Competition. A flat 20% tax in Japan (down from 55%) and full tax exemption in Uzbekistan create unprecedentedly attractive conditions for miners and traders. This could trigger an "exodus" of crypto businesses from jurisdictions with high taxation, such as Germany (up to 45%) or France (up to 30% plus social contributions).
For Society and the Economy
Japan: Lower tax burdens and the advent of ETFs will make cryptocurrencies accessible to mass investors through standard NISA brokerage accounts (similar to Russia's IIS). This could increase the share of households investing in crypto assets from the current 10-15% to 25-30% by 2030.
Uzbekistan: For the population of Karakalpakstan, Besqala Mining Valley primarily means jobs. Mining farms require engineers, electricians, system administrators, and construction workers. Using waste heat from equipment to heat greenhouses solves two problems at once: energy efficiency and agricultural development in an arid region.
However, risks remain: for individuals in Uzbekistan, P2P cryptocurrency trading is still banned and considered a violation of the law. This creates a dual reality: companies can legally mine and sell, but citizens cannot.
Reactions from Key Players
Japan: Cautious Optimism from the Industry
Major Japanese financial institutions, including Nomura Holdings and SBI Holdings, are actively preparing to launch crypto products. Lifting the ban on crypto asset ownership for venture funds through amendments to the LPS Act has unlocked investments in Web3 startups that previously had to register in Singapore or the Cayman Islands.
Finance Minister Katayama emphasized the dual goal of the reform: "to ensure transparency and investor protection while expanding access to capital." Notably, the government is betting not on bans but on inclusion within the regulated sphere.
Some market participants criticize the delay: ETFs will only appear in 2028, whereas Hong Kong and the US already have working products. However, others believe the two-year window will allow Japan to learn from the mistakes of pioneers.
Uzbekistan: Attracting International Players
In March 2026, the private entity NexaGrid received the first mining license in the Bukhara region. As stated by Askarjon Zakirov, head of the department for crypto asset circulation development, this precedent triggered a sharp surge in business interest.
Major international mining companies, including, according to unofficial reports, entities from Russia and China, are already studying the conditions of Besqala Mining Valley. The appeal is obvious: tax holidays until 2035 and the ability to use both cheap electricity from the unified grid and alternative sources.
Local authorities in Karakalpakstan are also interested—the net profit of the zone's directorate will go to the republican budget. This creates incentives for effective zone management.
Forecast and Conclusions
Analysis of the two cases reveals a common trend: states no longer view cryptocurrencies as a marginal phenomenon or a threat. Instead, they seek to integrate them into national economies, using regulation as a tool to attract investment and capital.
Japan: The Path to Institutional Adoption
Japan's reform will take effect after the bill is passed by parliament—expected in the second half of 2026. Key milestones:
- 2026-2027: Business adaptation to new disclosure requirements.
- 2028: Tax reduction to 20% and launch of crypto ETFs.
The Sanmark Intelligence Report from April 2026 showed that 42% of financial professionals worldwide cite regulatory uncertainty as the main obstacle to entering cryptocurrencies. Japan has just removed that obstacle—domestically. This could lead to a capital shift from less certain jurisdictions (e.g., the EU with its MiCA, still in the implementation phase) to Japan.
Forecast: By 2030, Tokyo could become one of the world's top three crypto trading hubs alongside New York and Singapore.
Uzbekistan: A Regional Mining Hub
Besqala Mining Valley begins operations immediately. The first residents could obtain status as early as the second quarter of 2026. Key success factors:
- Access to energy: The ability to use both grid electricity (at a tariff with a multiplier of 2, but still cheaper than European prices) and green sources.
- Legal export: The ability to sell mined assets on foreign exchanges—a fundamental difference from countries that allow mining but prohibit withdrawing cryptocurrency.
- Political will: A presidential decree is the highest form of legitimation.
However, restrictions for individuals (P2P ban) and the requirement to repatriate all proceeds may deter those accustomed to anonymity. Nevertheless, for professional miners, the conditions are extremely attractive.
Forecast: Uzbekistan could attract $2-3 billion in mining investments by 2030 and become the largest legal mining hub in Central Asia, surpassing Kazakhstan, where the tax regime is less favorable.
Main Conclusion
April 2026 could be a turning point. Japan shows how to integrate cryptocurrencies into a developed financial system, making them a full-fledged investment instrument. Uzbekistan demonstrates how to use the crypto industry to develop a troubled region, creating jobs and stimulating energy infrastructure.
Both approaches are valid, and both will be copied by other countries. For investors and market participants, this is a signal: the era of uncertainty is ending. Cryptocurrencies are becoming part of the mainstream—with all the pros (legitimacy, liquidity) and cons (taxes, reporting).
As one analyst aptly put it: "Cryptocurrency is a technology. Countries can either ignore it or use it—there is no third option." Japan and Uzbekistan have made their choice, and it is clearly in favor of use.
— Editorial Team
