Currently, crypto profits in Japan are treated as “miscellaneous income,” subjecting traders to a maximum tax rate of 55%. This punitive rate has long been a barrier to entry for both domestic and international investors, stifling innovation and hindering the growth of the digital asset market. But that could all change as early as 2026.
The FSA’s proposed reclassification would align crypto taxation with that of stocks, slashing the tax rate on capital gains to a much more palatable 20%. This potential parity with traditional financial assets is a game-changer, signaling a growing acceptance of crypto as a legitimate asset class within Japan‘s financial ecosystem.
According to a report in Asahi Shinmun, the FSA is pushing the government to enforce these tax reductions in time for the budget to be held in the first few weeks of 2026. The agency’s request aims to level the playing field for crypto investors and stimulate greater participation in the market.
Selection Criteria
Not all cryptocurrencies will benefit equally from this proposed change. The FSA has reportedly established a stringent set of criteria for determining which assets will be included in its “approved” list. Factors such as project transparency, the financial stability and reputation of coin issuers, the soundness of underlying technologies, and the perceived risk of price fluctuations will all be taken into consideration.
While the FSA has yet to make an official announcement, sources suggest that around 105 cryptoassets, including Bitcoin and Ethereum, are in line for the new classification.
Alongside potential tax breaks, the FSA is also looking to implement stricter regulations to combat insider trading within the crypto industry. The agency reportedly intends to ban individuals and companies with close ties to crypto issuers or exchanges from trading on privileged information.
Asahi reports that this includes previously undisclosed listing dates or sensitive information about an issuer’s financial health. These measures aim to foster a fairer and more transparent market, protecting investors from potential exploitation.
The Japan Virtual Currency Exchange Association (JVCEA), a self-regulatory body comprising the country’s leading crypto exchanges, already maintains its own “green list” of trusted tokens. The JVCEA curates its own “green list” of highly trustworthy tokens.
- Coins that are listed
- Tokens that have been listed
- Coins that the JVCEA considers “appropriate” and allows exchange members to list “unconditionally”
This potential regulatory overhaul comes at a time when Japanese firms are increasingly embracing Bitcoin and other cryptocurrencies. Companies like Metaplanet are leading the charge, mirroring MicroStrategy’s strategy of accumulating Bitcoin as a treasury reserve asset.
If the FSA’s proposals are approved, Japan could emerge as a major hub for crypto innovation and investment. The reduced tax burden and enhanced regulatory clarity would not only attract new capital but also foster a more mature and sustainable digital asset ecosystem.
While challenges remain, the potential for a more welcoming and regulated crypto market in Japan is undoubtedly a positive sign for the industry as a whole, signaling a growing recognition of the transformative potential of digital assets on a global scale.
