Japan’s Financial Services Agency (FSA) is preparing to request sweeping changes to the country’s crypto tax code for the 2026 fiscal year, seeking to align cryptocurrency taxation more closely with listed equities, according to a report from Nikkei.
The proposal, expected to be submitted by the end of August, would shift crypto gains into a separate tax category subject to a flat 20% rate. At present, crypto income is classified as “miscellaneous income” and taxed progressively at rates as high as 55%, excluding additional local taxes. Industry groups have long argued this framework has discouraged domestic investors and startups from entering the market.
Alongside the flat tax, industry firms have also lobbied for a three-year loss carry-forward provision to offset future profits against prior losses, a mechanism already available for securities trading. Such reforms could significantly reduce barriers for Japanese retail investors and institutional players to participate in the crypto economy.
The FSA’s tax request dovetails with broader efforts to strengthen Japan’s position as a crypto hub. The agency is also drafting a legislative bill, expected in 2026, that would reclassify digital assets as “financial products” under the Financial Instruments and Exchange Act rather than “means of payment” under the Payment Services Act. The change would make it easier for firms to launch domestically regulated crypto ETFs, a product that has gained traction globally but remains limited in Japan.
Separately, the regulator is preparing to greenlight the country’s first yen-denominated stablecoin. JPYC, issued by a Tokyo-based fintech company of the same name, has outlined plans to circulate up to 1 trillion yen ($6.78 billion) worth of the stablecoin over the next three years.
The twin reforms – lowering the tax burden on investors and introducing a fully regulated stablecoin – signal a broader shift by Japan to make its crypto industry more competitive. If enacted, the measures could reshape the domestic market, bringing it closer to international norms and potentially attracting fresh waves of capital into Japan’s digital asset ecosystem.
