Japan Plans Flat 20% Crypto Tax To Revive Local Trading

Japan is preparing to overhaul how it taxes cryptocurrencies by moving to a flat 20% levy on trading profits, putting digital assets on the same footing as stocks and investment trusts. The proposal, backed by the government and ruling parties, would shift crypto gains into a separate taxation category instead of folding them into regular income. Officials expect the plan to feature in the fiscal 2026 tax reform package that will be finalized later this month.  

Right now, profits from crypto trading are treated as miscellaneous income that gets added to salaries and business earnings, which means they can be taxed at rates as high as 55%. Under the new system, gains from digital assets would face a capped rate of around 20% split between national and local taxes, in line with how Japan handles equities and other financial investments. Supporters say the change would make the rules easier to understand and remove a big disincentive for active traders who currently pay far more tax on crypto than on stocks.  

The tax cut is part of a wider reset of Japan’s approach to digital assets. Policymakers are also working on plans to reclassify many cryptocurrencies as financial products under the Financial Instruments and Exchange Act, which would bring them under insider trading rules and stricter disclosure standards. Draft ideas would allow banks and insurers to offer crypto to their customers through securities arms, which would open the door for more regulated investment products tied to bitcoin and other coins.  

Tokyo’s goal is to keep homegrown projects and traders from moving overseas and to position Japan as a serious base for digital asset business in Asia. Industry groups have argued for years that the existing tax structure pushed retail traders offshore and limited the growth of domestic exchanges and listed companies that hold bitcoin on their balance sheets. A simpler 20% rate, combined with clearer financial product rules, is meant to change that picture and could encourage more local accumulation of crypto by both individuals and institutions once the reforms take effect in 2026.  

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