Japan recently released its 2026 tax reform blueprint, implementing a significant crypto tax reduction to a flat 20%. Crypto asset gains in the nation are currently subject to up to a 55% taxation, discouraging domestic trading.
The proposed tax change, supported by the government, would place crypto profits towards a flat 20% levy, bringing the asset class on par with equities and investment trusts.
Crypto Tax Shift to Attract More Investors
According to a Nikkei report on Monday, the shift in taxes will categorize cryptos under a separate framework. The announcement to reduce the tax burden has garnered widespread attention among Japanese investors.
“With cryptocurrencies now subject to the revised Financial Instruments and Exchange Act, various measures to protect investors are being put in place, making it easier for many people to accept cryptocurrencies,” said Kimihiro Mine, CEO of finoject, who is familiar with the crypto tax trends.
Law is Limited to ‘Specific’ Crypto Assets – Here’s Why
However, the tax reform has been confined to “specified crypto assets” handled by businesses registered in the Financial Instruments Business Operator Registry, the Monday report read.
Though major crypto like Bitcoin and Ethereum are likely to qualify as specified crypto under the rule, it is still unclear what the business requirements will be.
Additionally, for losses incurred from buying and selling virtual currencies, there will be a three-year carryover deduction system. This means that the losses can be carried forward and deducted for three years from 2026.
With the revision in law, investment trusts incorporating cryptos would be allowed in Japan. Besides, the country rolled out its first XRP exchange-traded fund (ETF), with further goals to launch two ETFs in Japan that offer exposure to specific crypto assets.
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