Key Takeaways
- Japan is moving to replace its progressive crypto tax rates, which can reach 55%, with a 20% tax on trading gains.
- The proposal would place digital asset profits under the same separate-taxation framework used for stocks and investment trusts.
- The government plans to include the change in the 2026 tax reform package.
- Lawmakers backing the plan say a lower, predictable rate could revive domestic crypto activity and support broader innovation in blockchain services.
New Framework Aims to Align Crypto with Equities
Japan is preparing its most sweeping revision of cryptocurrency taxation in years, backing a plan to replace its steep progressive rates with a 20% tax on crypto trading profits, bringing digital assets under the same framework that currently applies to equities and investment trusts.
According to a report from Nikkei Asia, the Japanese government and the ruling coalition have signaled support for the shift, which has been under discussion since the Financial Services Agency outlined the idea in November. The government expects to finalize the 2026 reform package by late December, after which the new crypto tax will be written into the country’s updated taxation structure.
What Will Change, and What Might Follow Next
Under current structure, Japan treats crypto earnings as “miscellaneous income” subject to a progressive structure that climbs from 5% to 45%, with top earners paying an additional 10 % in local taxes. Investors have long argued that the system penalizes active trading and encourages investors to hold assets purely to avoid triggering higher brackets.
However, under the new rule, gains from crypto trading would be separated from salaries and business income and assessed independently. 15% of the tax would go to the central government, with the remaining five percent directed to prefectural and municipal coffers.
The reform could revive domestic trading by easing the deterrent effect of the current system and placing digital assets on similar footing with equities, signalling their growing maturity as an investment class.
If approved, the overhaul would represent a clear shift in Japan’s stance on the sector and may change the way both traders and crypto-focused companies operate.
Japan’s Push to Modernize Crypto and Digital Finance
This latest tax reform discussion comes as Japan steps up a broader effort to reshape its digital finance landscape.
In November 2025, the Financial Services Agency approved of the first megabank-led stablecoin pilot under the national Payment Innovation Project. The initiative brings together Mizuho, MUFG, SMBC, Mitsubishi Corp., MUFG Trust, and Progmat to test a yen-pegged token designed for corporate payments.
The pilot aims to streamline inter-company settlements, improve fund management, and establish unified legal and technical standards across Japan’s largest financial groups — a sign that the country is building a regulated, bank-backed digital currency infrastructure alongside its tax overhaul.
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