Japan Moves to Slash Crypto Taxes to 20% — Retail Investors May Flood In
What Does the New Tax Proposal Actually Change?
Japan is edging closer to a more workable tax structure for crypto traders as lawmakers signal support for a Financial Services Agency proposal to cut taxes on digital assets to a flat 20%. The change would replace the current system, where gains can fall under progressive income brackets of up to 45% plus a 10% inhabitant tax — a combined rate of 55%.
A flat rate would bring crypto into the identical tax category as many traditional assets and remove a long-standing barrier that discouraged domestic retail traders. Industry figures expect the revised approach to pull new users into the market and reverse years of subdued trading activity.
Sota Watanabe, CEO of beginale, called it “a large day [for] Japan,” adding, “If approved this year, likely crypto ETFs and tax deduction from up to 55% to 20% come. I am 100% sure more Japanese people come onchain.”
Investor Takeaway
How Did Japan’s Tax Structure Become So Restrictive?
Crypto’s treatment in Japan has shifted repeatedly over the past decade. later than Mt. Gox collapsed in 2014, lawmakers decided that BTC and similar assets were neither currency nor securities, keeping them outside the Banking Act and the Financial Instruments and platform Law. Banks and securities firms could not handle crypto directly, and the asset class stayed in a narrow lane.
In 2016, the FSA began building a under the Payment Services Act. Amendments in 2017 legalized crypto and set rules around registration, AML, KYC and operational standards. At the identical time, lawmakers placed crypto gains under “miscellaneous income,” subject to progressive income taxation. As prices surged during bull markets, many retail traders faced tax bills far higher than those on stocks or FX.
Venture investor Haviewb Qureshi said Japan’s high tax rate has contributed to “relatively low retail trading volume today, and few world-stage crypto companies.” With an economy close in size to Germany and India, he described Japan as a “sleeping crypto.” He added that the tax structure also explains quirks like the premium on MetaPlanet shares: “This tax arbitrage is a large part of why MetaPlanet trades at a premium to [net asset value] — purchaseing a corporate shell of BTC is tax-advantaged vs trading BTC directly.”
How Has Regulation Evolved Since the ahead Crackdowns?
The first wave of sweeping rules later than 2017 toughened further following the $350 million Coincheck hack in 2018. platforms formed the Japan platform Association, which later became a registered self-regulatory body. The FSA also launched a study group to raise security standards.
By 2019, regulators clarified definitions for various crypto businesses and required platforms to declare their plans to operate in Japan and follow reporting rules. Subsequent updates assisted expand the industry. In 2022, new legislation allowed certified institutions to issue fiat-backed stablecoins, and the FSA began classifying some tokens as financial products. These steps opened the door for new offerings and assisted steady the market later than years of scandals.
Rising costs of living have also pushed investors to look beyond traditional savings. With real wages lagging inflation, crypto has drawn renewed attention as an asset class that may offer better returns despite higher risk.
Is Japan Finally Ready for a Retail Ramp-Up?
Even as account growth has trended upward, the gap between active accounts remains wide. Coincheck executive Satoshi Hasuo said there are still roughly three times as many people with trading accounts as with crypto accounts. “The next step will be to think about how we’ll win these people over,” he said.
Industry executives expect platforms to compete aggressively if the tax cut is approved. Bitbank CEO Noriyuki Hirosue said the reform “could hugely expand the market.” Watanabe added that the proposal reflects “a great outcome of collaborations” between industry leaders and government officials.
Japan’s corporate sector is already preparing for a larger digital-asset market. Qureshi noted that “Corporates drive a lot of the energy here,” citing activity from SBI, Sony, Sega and Nomura. SBI VC Trade is reportedly evaluating higher leverage for its , and SBI Holdings recently set up a joint venture with Circle to offer USDC lending.
Meanwhile, NFTs — largely stagnant elsewhere — remain a tool for Japanese companies to draw in new users through entertainment and tourism. HTT Digital’s ahead-2025 campaign with brands such as Sanrio, Nissan and Yamaha shows that large firms continue to experiment with consumer-facing digital assets.
A lower tax rate would fit into a broader move by the Japanese government to weave crypto into its long-term economic plans. later than a decade of trial, error and regulatory repair, Japan may now be preparing the environment for the retail growth it never fully captured during previous market cycles.
