Japan appears ready to overhaul its approach to taxing digital assets, with the government and ruling coalition supporting a plan to introduce a flat 20% tax on crypto profits. This shift marks a substantial change from the current structure, where crypto gains are treated as “miscellaneous income.” They are taxed according to income brackets that range from 5% to 45%, plus an additional 10% inhabitant tax for high earners. The proposal originally surfaced in mid-November when the Financial Services Agency (FSA) outlined its intention to push forward a bill in early 2026. The adjustment would bring the treatment of crypto profits closer to that of equities and investment funds. Both of these fall under a consistent 20% rate regardless of the amount earned. Supporters argue this could encourage broader participation in the domestic crypto market, as many traders and companies have long viewed the higher tax range as a deterrent.
Government Aligns With Regulator on New Framework
According to a report from Nikkei Asia, the government sees the planned reform as part of a broader upgrade to Japan’s financial rules. The FSA intends to submit the bill during the 2026 ordinary session of the National Diet. It will fall under amendments to the Financial Instruments and Exchange Act, which already governs securities and investment products.
Alongside the new tax structure, the FSA plans to introduce tighter controls on trading activity. Proposed measures include restrictions on dealing with non-public information and stricter requirements around disclosures for firms handling digital assets. The agency aims to present these rules as part of a wider protection framework to ensure a safer and more transparent market as investor participation grows.
At present, crypto trading sits in a separate category from other investment activities. By integrating digital assets into a structure closer to mainstream financial products, regulators hope to reduce confusion and streamline the rules that apply to traders and businesses.
Japan Blockchain Association’s Proposal
The Japan Blockchain Association (JBA) has spent nearly three years pushing for a simpler, unified tax rate. In July 2023, the group issued a public letter outlining several reforms it believed necessary for the industry to grow. Among them was the introduction of a flat 20% tax to match other investment vehicles, arguing that the current approach discouraged both companies and individual participants.
While the FSA has not confirmed whether the JBA’s lobbying directly influenced its plans, the agency began showing willingness to revisit the issue in 2024.