Japan’s Financial Regulator Advocates for Reduced Crypto Taxes in 2025
Japan’s Financial Services Agency (FSA) has proposed a significant revision to the national tax framework for fiscal year 2025, specifically concerning the taxation of cryptocurrency assets. In a request for tax reform submitted on August 30, 2023, the FSA advocated for a reclassification of crypto assets as traditional financial instruments, which would facilitate their acceptance as viable investment options for the public. According to the FSA, “regarding the tax treatment of cryptocurrency transactions, cryptocurrency should be treated as a financial asset that should be an investment target for the public.”
Currently, profits from cryptocurrency transactions in Japan are categorized as miscellaneous income and are subjected to taxation rates ranging from 15% to 55%. Notably, the highest tax rate of 55% applies to earnings exceeding 200,000 Japanese yen (approximately $1,377), and this rate is contingent upon the taxpayer’s income bracket. In contrast, profits derived from stock trading face a maximum tax rate of merely 20%. Furthermore, corporate entities holding cryptocurrency are mandated to pay a fixed tax rate of 30% on their crypto holdings at the end of the fiscal year, irrespective of whether any profits have been realized through sales.
The path to tax reform involves submissions from various government ministries to the ruling party, which subsequently directs these proposals to a tax system research committee and the national legislature, including both the House of Representatives and the House of Councilors, for approval.
Proponents of the cryptocurrency industry have long sought adjustments to the taxation of digital assets in Japan. The Japan Blockchain Association, an influential pro-crypto lobbying organization, formally appealed to the government in 2023 for a reduction in the tax rates imposed on cryptocurrencies. On July 19, 2023, the Association reiterated this request for the 2025 fiscal year’s tax reform, advocating for a uniform tax rate of 20% for cryptocurrency transactions, as well as the introduction of a three-year loss carryover deduction. Despite these initiatives aimed at reform, prior efforts have not translated into changes in policy within Japan’s regulatory landscape.
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