Japan Plans to Propose a Flat 20% Rate on Crypto Assets
Japan is getting closer to a major change in crypto taxes. According to reports, the government supports plans for a drop in the country’s maximum crypto tax to a flat 20% on crypto profits. The tax on crypto will be at par with equities and investment funds, all taxed at a uniform 20%.
The Financial Services Agency (FSA) first proposed these reforms in mid-November, aiming to submit a bill to the National Diet of Japan by early 2026. The government and ruling coalition have since expressed support for the reforms, marking a potential turning point for the country’s crypto sector.
Current Crypto Tax System in Japan
According to existing rules in Japan, crypto trading is classified as “miscellaneous income.” It is therefore subject to tax rates ranging from 5% to 45%, depending on income level. Wealthy individuals also pay an additional 10% inhabitant tax.
In contrast, equities and investment trusts are taxed at a flat 20% on profits, regardless of income. This proposed reform would simplify taxation and offer fairer treatment for both individual and institutional investors.
Investor-Friendly Reforms Could Boost Crypto Adoption
The new regulations will be implemented as part of the Financial Instruments and Exchange Act under the FSA’s “solid investor-protection framework.” According to the bill, crypto trading will face increased scrutiny, with insider trading prohibited and stricter investor disclosure requirements enforced.
Japan Blockchain Association (JBA) has been advocating for these reforms for almost three years. The JBA stated in a July 2023 letter to the government that high crypto tax rates remain a major hurdle for Web3 companies and impede public adoption of crypto.
“This letter requests a review of tax on crypto assets, which is the biggest hurdle for companies operating Web3 businesses in Japan and a disincentive for the public to actively own and use crypto assets.”
While the JBA’s direct influence on the FSA’s decision is unclear, the financial regulator publicly endorsed tax reform as of September 2024, signaling growing momentum.
Japan’s Crypto Market in 2026
The Japanese crypto market could see a major boost from these reforms by simplifying taxation and creating parity with traditional investment assets. The changes are expected to attract retail investors and institutional players, providing clarity and fairness to the cryptocurrency ecosystem.
Japan may finally overcome one of the biggest roadblocks to mainstream crypto adoption — high and inconsistent taxation — with the FSA reportedly set to submit the bill in the 2026 regular Diet session.
