Government Proposes Flat 20% Tax on Crypto Earnings
The Japanese government is preparing to drastically reduce taxes on cryptocurrency earnings. Under the current system, crypto income is subject to a graduated income tax rate of up to 55%.
However, the government supports changing this tax to a flat 20% rate, similar to that used for stocks and other financial investment instruments. This change is a key element of the tax reform package being prepared by the Financial Services Agency (FSA).
Timeline and Industry Impact
The new tax regulation is scheduled to be submitted to the Japanese parliament in early 2026. This step aims to provide relief to the local crypto industry, which has long been under pressure due to high tax burdens.
The Japan Blockchain Association (JBA) has been calling for reform for the past three years, saying tax rates of up to 55 percent are pushing investors abroad and slowing the growth of the country's crypto ecosystem.
Enhanced Investor Protection Measures
According to the report, the new tax system will not be limited to simply lowering rates. The government also plans to introduce a series of additional safeguards to strengthen investor protection.
These include stricter oversight of insider trading, increased disclosure obligations for platforms, and new regulations to increase market transparency.
Strategic Move for Global Competitiveness
Japan's move is seen as a strategic step aimed at boosting the country's competitiveness at a time when crypto assets are increasingly integrated into the mainstream financial system. If the new tax model is approved, Japan could become a more attractive market for crypto investors.