Japan is preparing one of its most far-reaching cryptocurrency policy shifts as it moves toward a 20% flat tax on digital asset gains, a change that places crypto on the same footing as equities and investment trusts. The reform arrives as regulators draft new oversight rules, expand token classifications, and prepare a 2026 bill that could reshape trading behavior, custody demand, and institutional participation across the country’s digital asset market.
Tax Shift Signals Major Policy Update
Japan’s Financial Services Agency (FSA) aims to introduce a separate taxation scheme for cryptocurrency income. According to Nikkei, the plan assigns 15% to national income tax and 5% to regional resident tax. Officials intend to include the change in the 2026 tax reform outline at the end of the year.
Currently, crypto income falls under wages and business earnings. It faces progressive tax rates that can reach 55%. Investors often delay selling assets due to steep tax burdens. According to reports, equities and investment trusts are subject to a uniform 20% rate. Aligning cryptocurrencies with these instruments could increase trading activity. It could also expand tax revenue as more investors transact without fear of heavy taxation.
Japan’s shift also reflects a broader understanding that digital assets now function as established investment products. Data from the Japan Virtual and Crypto Assets Exchange shows roughly 8 million active accounts. The group recorded about 1.5 trillion yen ($9.6 billion) in spot trading volume in September.
The FSA says banks and insurance firms could soon offer crypto products through custody partners or affiliated brokers. These offerings must meet strict insider-trading and disclosure obligations. Regulators are preparing a whitelist of about 150 approved tokens. Assets outside the list will face limited exchange access and tighter restrictions. As the rules evolve, domestic custody could rise. Corporate treasuries may also begin allocating to compliant tokens under clearer accounting frameworks.
Regulatory Framework Expands With New Exchange Oversight
The FSA intends to submit a bill to amend the Financial Instruments and Exchange Act during the 2026 Diet session. The proposal will introduce an insider-dealing ban for digital assets. It will also require issuers to disclose key information.
The transition to separate taxation depends on a robust investor protection framework. Policymakers still track cases of illicit outflows. In 2024, Bitcoin worth about 48.2 billion yen was stolen from DMM Bitcoin. Security improvements remain central to the regulatory plan.
The upcoming framework could support investment trusts that include cryptocurrencies. Similar products have gained traction overseas. BlackRock’s U.S. Bitcoin ETF holds about $70 billion in assets. Japan’s strategy signals a detailed and coordinated direction for its digital asset market.
Global Context and Industry Implications
Policymakers in Japan are aware of the necessity to harmonize tax systems with worldwide financial trends. The government believes that tailored regulations could strike a balance between the freedom to innovate and investor security. The common tax rate of 20% applies to both crypto and traditional investments.
Regulators think that if the law is simpler, exchanges may operate more effectively. They also believe it is possible to attract institutional players through better custody practices. Furthermore, the new token whitelist introduces consistent classification standards. Exchange will adjust listings based on these criteria. Banks and insurance firms must follow disclosure rules before offering crypto products.
The year 2026, earmarked for implementation, brings transparency to the investors’ timelines. Additionally, it poses a clear timetable for the exchanges and issuers to comply with the requirements.