According to a report published by local agency Nikkei Asia, Japan’s ruling coalition has officially endorsed a plan to shift crypto taxation from the current 55% to a flat 20% capital gains rate. If approved, cryptocurrency gains in Japan will be taxed at the same rate as stocks and other investments. It marks a shift in how digital asset earnings were taxed till now and also eases the burden on everyday traders.
FSA’s Broader Regulatory Overhaul
The development came to light on Monday, after reports indicated that the government and the FSA had agreed to support the tax overhaul. The FSA isn’t just changing the tax code, it’s rethinking how crypto assets are regulated. Under the new proposal, 105 leading cryptocurrencies, including Bitcoin and Ethereum, will be reclassified as financial products under the Financial Instruments and Exchange Act (FIEA).
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This reclassification will bring crypto into the same regulatory framework that governs stocks and investment funds. This will also require crypto exchanges to publish detailed disclosures for each token. There will be more transparency in terms of issuer identity, blockchain technology used, the token’s volatility profile, and related risks.
The new reforms will also introduce restrictions like those currently placed on securities. More importantly, the new reforms will ban insider trading by people with access to non-public or material information. It will also allow institutional players, like banks and insurers, to hold approved cryptocurrencies or to register as licensed crypto exchanges. This will help unlock more capital for the market.
What’s Next for Crypto in Japan?
The bill is expected to be submitted during the next regular Diet session. If all goes well, then the new framework could take effect in the same fiscal year of 2026. For retail traders, the flat 20% tax removes a major obstacle to realizing gains, especially for high earners, who were subjected to the steep 55% rate so far. Moreover, limiting the rule to only 105 blue-chip tokens will encourage adoption of established cryptos while putting a cap on speculative risks. By aligning crypto with securities laws, Japan aims to boost investor protection, transparency, and market stability.
