Japan Plans 20% Crypto Tax, Boosting Institutional Investment by 2026
Japan is preparing to make a significant change to its crypto tax policy, moving from a multi-tiered system that taxed gains at up to 55%...
Quick overview
- Japan is set to lower its crypto tax rate from a maximum of 55% to a flat 20% starting in 2026.
- The new tax structure will separate crypto gains from wages and business income, making it more appealing for retail investors.
- A limited allowlist of around 150 approved tokens will be established, allowing banks and insurers to offer crypto products more easily.
- This reform positions Japan favorably compared to other G7 countries in terms of digital asset adoption.
Japan is preparing to make a significant change to its crypto tax policy, moving from a multi-tiered system that taxed gains at up to 55% to a flat 20% rate starting in 2026. Its current system is pretty off-putting for local investors, which is one reason the government is introducing change. The flat tax rate will be simple: 15% will go to income tax, and the other 5% will go to regional authorities, just like with investment trusts and equities.
The new rules treat crypto gains completely separate from wages and business income, which is great news for anyone who wants to get involved in crypto trading. Analysts think this will make retail trading more appealing, especially to younger investors – the Japanese government is set to let minors invest without paying tax. The local press is also speculating that the government is trying to get people to join the equity markets and take part in crypto at the same time.
Some points to take on board:
- The 20% flat tax rate is a big improvement on the 55% tax rate previously in place
- The 5% regional tax and 15% income tax split is a much simpler system
- Minor investors may be able to avoid tax altogether
- The reforms are due to go through in 2026
🚨BREAKING
🇯🇵 Japan to implement a flat 20% crypto tax to boost market growth. pic.twitter.com/RyeTbLWPe8
— DustyBC Crypto (@TheDustyBC) December 1, 2025
Japan Getting Ready to Bring Crypto Under the Regulatory Umbrella
The Japanese Financial Services Agency is busy preparing to update its rules to align with the new tax system. Crypto will be treated as a financial product under the Financial Instruments and Exchange Act, bringing a vast number of tokens into line with shares and investment funds. Banks and insurance companies should find it much easier to enter the crypto space now that they can offer crypto products through custody services or affiliated brokers.
There is going to be a limited allowlist of around 150 approved tokens – if your token isn’t on the allowlist, then you can expect to face restrictions when you come to try to trade it. The FSA is particularly keen on the idea that all the big players must stick to the rules and follow good practices regarding insider trading and disclosure.
Some key points:
- Crypto is effectively being treated like any other financial product under FSA rules
- Banks and insurers are finally going to be able to offer crypto products to their customers
- There will be a list of about 150 approved tokens that will be allowed to circulate freely
- Anyone who is going to invest in crypto has to follow the rules
What This Means For Institutions and How Japan Compares
By reclassifying crypto assets and lowering the tax rate from 55% to 20%, Japan is effectively removing a major barrier to institutional entry. Tokens that receive approval can be held in a bank’s custody and receive the same tax treatment as shares, making it much easier for institutions to get involved, while non-approved assets will just be stuck in a holding pattern.
It’s worth taking a look at how Japan compares to other developed economies:
- U.S.: The tax situation is a bit of a mess, ranging from 0% to 37% depending on how long you hold on to your crypto
- UK: 20-28% capital gains tax
- Germany: Good news if you invest in crypto for a year or more – no tax is payable
- France: 30% flat tax on all your crypto profits
By reducing the tax rate on crypto, Japan is making a big bet that it will unlock a lot of new activity – and it may be right, because right now it is in a strong position compared to other G7 countries when it comes to digital asset adoption.
- Check out our free forex signals
- Follow the top economic events on FX Leaders economic calendar
- Trade better, discover more Forex Trading Strategies
- Open a FREE Trading Account
Save