Japan Mulls Cutting Crypto Tax to 20%

Japan is contemplating modifying its crypto tax legislation, which could result in a reduction consistent with other financial assets.

The Financial Services Agency (FSA), the nation’s financial regulator, has recently proposed a reform that could reduce the tax rate on crypto profits to a uniform 20%.

The proposition was delineated in a request for tax reform on August 30 as part of a more comprehensive review of the fiscal code for the year 2025.

FSA Fights for Cryptocurrency to Be Treated as Tradeable Assets

The FSA advocates classifying cryptocurrencies as conventional financial assets, increasing their accessibility for public investment.

The FSA stated in its report that cryptocurrency should be regarded as a financial asset and an investment target for the public.

Japan currently taxes cryptocurrency revenues under the miscellaneous income category, with rates varying from 15% to 55% based on the individual’s income bracket.

The high tax rate can be applied to earnings exceeding $1,377 (200,000 Japanese yen), a substantial burden for numerous Crypto investors.

Conversely, the Federal Securities Administration (FSA) recommends that cryptocurrency profits be subject to a 20% tax rate, similar to stock trading profits.

Furthermore, regardless of whether they transfer their assets at a profit, corporate holders of crypto assets are obligated to pay a uniform 30% tax on their holdings.

The proposed modifications would provide some relief to both corporate and individual investors, thereby improving the tax environment for cryptocurrency.

There are numerous phases involved in amending tax laws in Japan.

Initially, the governing political party receives tax reform requests from government ministries.

Before being reviewed by the national legislature, these requests are forwarded to the tax system research committee.

Reforms must be approved by the House of Representatives and the House of Councilors to become law.

For an extended period, advocates within Japan’s crypto industry have advocated for a revision of the tax regime.

In 2023, the Japan Blockchain Association (JBA) formally requested the government to alleviate the tax burden on crypto assets.

They proposed a three-year loss carryover deduction and a fixed 20% tax rate to promote sector growth.

Nevertheless, prior endeavors have yet to result in tangible policy modifications.

Japan’s Active Crypto Trading Population to Grow Rapidly

According to a Bitget study, which forecasts a rapid rise in Japan’s crypto adoption, the number of people transacting daily will rise from 350,000 to roughly 500,000 by the end of the year.

Japan’s market size would be approximately two-thirds that of South Korea and between that of Turkey and Indonesia as a result of the surge.

“The landscape in Japan is dynamic and rapidly evolving due to the high level of awareness of cryptocurrency,” stated Gracy Chen, CEO of Bitget.

She further stated that Japan is a prime location for extensively using new technologies due to the exciting possibilities and current trends.

Sony Group, a Japanese technology behemoth, has recently entered the cryptocurrency market by acquiring Amber Japan, a crypto firm.