Japan moves to impose flat 20% tax on crypto profits

The proposal would shift crypto income into separate taxation, replacing today’s progressive schedule under which gains are aggregated with wages and business income and can be taxed at rates as high as 55%. Under the separate‑tax regime, revenue would be split 15% to the national government and 5% to regional authorities. Officials intend to include the change in the 2026 tax reform outline due at year‑end.

Policymakers argue that harmonizing crypto with the 20% rate already applied to stocks and mutual funds could reduce incentives to delay selling, deepen domestic liquidity and ultimately broaden the tax base. They also see a potential knock‑on effect for related industries, including blockchain services and infrastructure.

Officials say the shift reflects how crypto has matured as an investment product. Data from the Japan Virtual and Crypto Assets Exchange Association (JVCEA) show roughly 8 million active accounts nationwide, with September spot volume around ¥1.5 trillion (≈$9.6 billion).

In parallel, the Financial Services Agency (FSA) plans to submit a 2026 bill to amend the Financial Instruments and Exchange Act (FIEA), tightening oversight of crypto markets. Draft elements include a ban on insider dealing using non‑public information and disclosure obligations for issuers of digital currencies.

Officials stress that the transition to separate taxation presumes a stronger investor‑protection framework. Security incidents remain a concern: in 2024, about ¥48.2 billion in bitcoin was stolen from local exchange DMM Bitcoin. Regulators say improving exchange security and supervision is indispensable as participation grows.

The tax overhaul is expected to clear the way for investment trusts that include crypto, mirroring products that have gained traction overseas. Japan has watched international adoption accelerate: in the U.S., BlackRock’s Bitcoin ETF now oversees roughly $70 billion in assets under management.

If enacted as outlined, Japan’s move would place crypto gains on a clear, predictable footing for taxpayers, while a parallel tightening of market rules aims to curb abuse—an approach intended to encourage participation without compromising safeguards.

As GNCrypto wrote previously, on Sept. 19, 2025 the Bank of Japan kept its policy rate at 0.5% but unveiled plans to sell part of its ETF and REIT holdings (about ¥330 billion in ETFs and ¥5 billion in REITs annually). The 7–2 vote—with Hajime Takata and Naoki Tamura favoring a 25 bp hike—signaled a cautious shift toward balance‑sheet reduction. Markets reversed on the day as the Nikkei fell from record highs, 10‑year yields climbed, and the yen firmed 0.4–0.5% against the dollar.