Japan Slashes Crypto Tax to 20% - But There’s a Major Catch for ’Specific’ Digital Assets
Tokyo makes a move that could reshape its crypto landscape—if you hold the right tokens.
The headline number is a siren call for investors: a 20% flat tax rate on crypto gains. That's a massive cut from previous brackets that could soar above 50%. The policy aims to stop talent and capital from fleeing to more favorable jurisdictions like Singapore or Dubai. It’s a clear signal Japan wants back in the game.
The Devil in the Details
Don't start celebrating just yet. This isn't a blanket amnesty for your entire portfolio. The new rate applies only to what regulators are calling 'specific' digital assets. The definition remains tightly controlled, likely favoring tokens issued by established companies or those already playing nice with the Financial Services Agency (FSA). Your favorite meme coin or DeFi governance token? Probably not making the cut. It’s classic bureaucracy—offering a carrot while keeping the stick very much in hand.
A Calculated Gambit
This isn't charity; it's a strategic play. By lowering the barrier for approved projects, Japan hopes to foster a domestic Web3 ecosystem it can monitor and tax efficiently. They’re betting that a lighter touch on ‘good’ crypto will bring more activity onshore, increasing overall taxable volume. It’s a page from the traditional finance playbook: regulate a slice of the market into legitimacy and watch the rest scramble to get in line. Because nothing says innovation like needing a government stamp of approval on your blockchain.
The move creates a two-tier market overnight. Assets on the right side of the regulatory wall get a turbo boost. Everything else remains in the high-tax wilderness. It forces a brutal calculus on every project and investor: pivot to please the authorities, or bear the full weight of the old regime. Japan isn't just changing a tax rate—it's picking winners. And in crypto, that’s a game where the house always has an edge, even when it’s dressed in digital clothing.
Crypto Tax Shift to Attract More Investors
According to a Nikkei report on Monday, the shift in taxes will categorize cryptos under a separate framework. The announcement to reduce the tax burden has garnered widespread attention among Japanese investors.
“With cryptocurrencies now subject to the revised Financial Instruments and Exchange Act, various measures to protect investors are being put in place, making it easier for many people to accept cryptocurrencies,” said Kimihiro Mine, CEO of finoject, who is familiar with the crypto tax trends.
Law is Limited to ‘Specific’ Crypto Assets – Here’s Why
However, the tax reform has been confined to “specified crypto assets” handled by businesses registered in the Financial Instruments Business Operator Registry, the Monday report read.
Though major crypto like Bitcoin and ethereum are likely to qualify as specified crypto under the rule, it is still unclear what the business requirements will be.
Additionally, for losses incurred from buying and selling VIRTUAL currencies, there will be a three-year carryover deduction system. This means that the losses can be carried forward and deducted for three years from 2026.
With the revision in law, investment trusts incorporating cryptos would be allowed in Japan. Besides, the country rolled out its first XRP exchange-traded fund (ETF), with further goals to launch two ETFs in Japan that offer exposure to specific crypto assets.
