2nd December 2025 – After years of steep tax rates, the Japan government is now proposing a flat 20% tax on cryptoc profits starting in 2026. This reform marks a bold shift in Japan’s approach to digital assets, aiming to attract investors, encourage innovation, and bring crypto into the financial mainstream.
Key Takeaways
Japan will introduce a flat 20% tax on crypto profits starting in 2026, replacing the current progressive system that can reach 55%.
The Financial Services Agency (FSA) will reclassify crypto assets as financial products, aligning them with stocks and investment trusts.
A whitelist of 150+ approved tokens is being developed, granting them regulatory benefits such as institutional custody and better tax treatment.
Institutions like banks and insurance firms may offer crypto investment products under strict compliance and disclosure rules.
What’s Changing in Japan’s Crypto Tax Code
Currently, crypto gains in Japan are taxed progressively, with rates climbing up to 55%. This system lumps crypto profits in with other personal income like salaries, which has discouraged many retail and institutional traders.
Under the new proposal, however, crypto earnings would be taxed at a flat rate of 20%. This mirrors how capital gains from stocks and investment trusts are treated. The breakdown includes 15% national income tax and 5% local resident tax. This change separates crypto from traditional income and places it under a special category.
According to NHK, the proposal will be officially included in the 2026 tax reform package, expected by December.
Japan Crypto Tax Timing
This tax shift follows a wider regulatory strategy led by Japan’s Financial Services Agency (FSA). Earlier in 2025, the FSA reclassified crypto as a financial product, grouping it alongside stocks and funds under the Financial Instruments and Exchange Act.
This was a major trigger. By recognizing 105 cryptocurrencies, including Bitcoin and Ethereum – the FSA opened the door for updated tax rules and institutional access. The Japanese government now wants to:
Improve competitiveness and keep pace with other major economies.
Simplify tax rules to boost compliance and reduce evasion.
Unlock crypto innovation by lowering the cost of participation.
The timing also aligns with efforts to expand equity markets and even allow minors to make tax-free investments.
What’s in It for Investors
For retail traders, this reform could be a game-changer. Instead of losing up to 55% of their profits, investors would now pay a predictable 20%. This could boost trading volumes and restore confidence.
The simplified system also improves planning and transparency. Investors can now calculate expected taxes before selling, just as they would with equities. This treats crypto more like a legitimate asset class and not as speculative income.
Institutional Crypto Access Is Coming
The FSA is preparing to allow insurance companies and banks to offer crypto investment products. These services would be tied to approved tokens held in custody, likely using regulated brokers or partners.
A whitelist of around 150 approved tokens is in the works. Inclusion in this list will be necessary for market access, including trading and custody. Assets not on the list will face restrictions.
This dual classification system (approved vs. non-approved) adds clarity for institutions and sets the stage for deeper integration of crypto into Japan’s financial system.
Notably, the FSA will also launch a public consultation period before finalizing these laws.
Crypto Tax In Other Countries
Japan’s 20% flat tax would match the UK’s capital gains tax and beat France’s 30% rate. The US taxes crypto profits as property, with rates from 0% to 37% based on holding duration. Germany exempts long-term holdings, but taxes short-term gains like income.
With this reform, Japan leapfrogs into the ranks of the most crypto-friendly G7 nations.
Crypto Tax Treatment – Selected Major Countries (2025, simplified)
Country
Capital Gains / Disposal
Income & Special Rules
United States
The IRS treats crypto as property, so selling, trading, or spending it creates a taxable event.
Moreover, long-term gains (>1 yr) fall between 0–20%, while short-term gains (<1 yr) follow ordinary income rates (10–37%).
Mining, staking, airdrops, and salary in crypto count as ordinary income.
Additionally, taxpayers can offset losses, and every swap triggers taxation.
India
India imposes a flat 30% tax on all VDA profits, regardless of holding time.
Furthermore, a 1% TDS applies to most crypto transfers, ensuring traceability.
The tax system prohibits setting off crypto losses.
Additionally, gifts or airdrops may fall under VDA rules when they exceed thresholds.
United Kingdom
The UK considers crypto a capital asset, so CGT applies during disposals.
Consequently, most individuals fall into the 10–20% CGT range after allowances.
Mining, staking, or operating as a business triggers income tax instead.
Moreover, investors can carry forward capital losses under CGT rules.
Germany
Germany allows tax-free sales when investors hold crypto for more than one year.
However, short-term profits and gains exceeding €1,000 become taxable at personal income rates.
Staking, lending, and frequent trading usually trigger income taxation.
Consequently, Germany rewards long-term holding strategies.
Switzerland
Private individuals typically pay no capital gains tax on crypto.
However, cantons still assess wealth tax based on portfolio value.
When traders act professionally, authorities treat their profits as income.
Additionally, professional classification depends on leverage, volume, and intent.
Portugal
Portugal taxes short-term holdings (<365 days) at ~28%.
Meanwhile, long-term holdings often remain tax-free for non-professional investors.
Professional or frequent trading leads to business-income taxation.
Consequently, classification matters heavily for Portuguese taxpayers.
Canada
Canada taxes 50% of crypto capital gains (or two-thirds at higher income levels).
Moreover, disposal includes swaps, spending, and conversions.
Business-like trading leads to full taxation as income.
Additionally, the CRA enforces strict reporting requirements.
Australia
Australia applies CGT rules to crypto and grants a 50% discount on gains held over one year.
Consequently, long-term investors enjoy tax benefits.
Mining, staking, and business activities fall under income tax.
Additionally, low-value personal-use crypto may qualify for CGT exemption.
Japan
Japan adds most crypto gains to total annual income, which can push taxpayers into high brackets.
Consequently, rates may reach ~55% including local taxes.
Loss offsets remain limited.
Meanwhile, debates continue about shifting crypto to a capital-gains model.
Singapore
Singapore imposes no capital gains tax on personal crypto investments.
Therefore, most passive investors pay 0% when selling their holdings.
However, business activity—including trading or mining—faces income tax.
Additionally, GST may apply if tokens don’t qualify as digital payment tokens.
United Arab Emirates
The UAE charges no personal income or capital-gains tax on crypto investments.
Consequently, everyday trading and holding remain tax-free for residents.
Corporate crypto businesses, however, may fall under corporate-tax rules.
Moreover, new reporting frameworks increase transparency.
Brazil
Brazil taxes capital gains at ~15–22.5%, depending on annual gains.
Additionally, investors must report trades once they exceed monthly limits.
Crypto-related income falls under progressive income-tax brackets.
Meanwhile, regulators are exploring new transaction-tax frameworks.
Korea planned a 20% crypto CGT but postponed it to around 2027–2028.
Therefore, retail investors currently face no separate CGT on most gains.
Nevertheless, staking, mining, and business income remain taxable.
Additionally, exchanges must follow strict compliance rules.
South Africa
Crypto counts as a financial asset, so CGT applies when investors treat it as capital.
Effective CGT rates may reach ~18% for individuals.
Active trading or mining typically falls under income tax.
Moreover, SARS expects full self-reporting of holdings and gains.
France
Occasional individual investors pay a flat 30% on net crypto gains.
Additionally, disposals under €305 per year avoid taxation.
Professional traders fall under business-income rules.
Consequently, high-income individuals may pay significantly more in taxes.
China (Mainland)
China restricts most crypto trading and bans exchanges.
Nevertheless, residents must declare offshore crypto income when required.
Authorities apply existing business and income-tax rules to any recognized crypto activity.
Consequently, enforcement focuses on capital controls and compliance rather than CGT rules.
What Happens Next?
The legislation is expected in late December, with full implementation in 2026. Until then, current tax rules still apply.
However, the message is clear: Japan wants to lead on digital asset regulation. By combining fairer tax treatment with a modern legal framework, it hopes to pull ahead as a crypto innovation hub in Asia and beyond.
If successful, the reform could push other countries to reconsider their tax approaches, especially if Japan sees a spike in institutional allocation and trading volume.
Starting in 2026, Japan plans to apply a flat 20% tax on crypto gains, replacing its current progressive system which can reach up to 55%.
Why is Japan making this change?
To simplify compliance, attract investors, encourage innovation, and align its policies with other major economies like the UK and France.
Will the new tax apply to all tokens?
Only tokens approved by the Financial Services Agency (FSA) and included in the upcoming whitelist will qualify for the new framework and benefits.
How does Japan’s crypto tax compare globally?
Japan’s 20% flat rate is competitive. France applies 30%, the UK ranges from 20–28%, and the U.S. varies from 0–37% depending on holding period.
What does this mean for institutions?
Approved assets will allow banks and insurance companies to offer crypto investment products, boosting institutional participation under clear regulations.
The Talk
Real voices. Real reactions.
LOW
JUST IN: 🇯🇵 Japan to cut Bitcoin and crypto tax to 20% https://t.co/oIyKMSMd9Y
Bitcoin Archive
@BitcoinArchive
about 14 hours ago
LOW
Japan is planning to tax crypto gains at a flat 20% like stocks, instead of the current progressive rates that can go up to 55%.
Plan is set to go into the 2026 tax reform outline, covering about 8M domestic accounts trading ~¥1.5T a month.
Source: Nikkei https://t.co/VKgcm4U89q
Wall St Engine
@wallstengine
about 20 hours ago
LOW
🚨 BREAKING: Japan slashes crypto taxes to a flat 20% on gains, down from up to 55%.
Time to move to Japan! 😄 https://t.co/J4skf5y7D0
Real World Asset Watchlist
@RWAwatchlist_
about 18 hours ago
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