Japan’s stringent crypto tax policies are currently deterring both buyers and sellers. In a survey conducted in April with 1,500 adults, only 13% reported owning Bitcoin, Ethereum, or other cryptocurrencies. Many respondents indicated they would be more inclined to invest if Tokyo lightened the tax load.
Widespread Support for a Flat Tax
According to the Japan Blockchain Association, 84% of the 191 current crypto holders would increase their investments if profits were subject to a flat 20% tax rate. Meanwhile, 12% of the 1,309 non-owners expressed willingness to start purchasing bitcoin or other cryptocurrencies under such a tax framework. This contrasts sharply with the existing system, where crypto earnings are categorized as “other income” on tax filings.
Currently, crypto gains can be taxed as high as 55%, depending on the income bracket. This is significantly higher than the 10–20% flat rates that apply to stock gains in many other nations. Reports suggest the JBA is advocating for crypto to be classified under capital gains, which they argue would increase trading activity on domestic exchanges.
Survey Indicates Preference for Simplified Taxation
A significant portion of survey respondents, 75%, favored having taxes deducted at the point of sale for bitcoins, rather than dealing with additional paperwork. The JBA has proposed allowing traders to choose between paying taxes at the time of sale or when filing their annual returns, potentially simplifying the process for both casual and professional investors.
The survey also explored reasons for crypto hesitancy, finding that only 8% cited high taxes, while 61% felt insufficiently informed about digital currencies. The survey sample was comprised of 60% men and 40% women, with an average age of 38. Students accounted for 5.3% of participants, and 213 people identified as unemployed.
FSA Examines Comprehensive Reforms
The Financial Services Agency is reportedly contemplating a proposal to classify bitcoin under the Financial Instruments and Exchange Act. If implemented, this change would officially recognize digital assets as financial products, potentially introducing a unified 20% tax rate as early as next year.
Exchanges like bitFlyer already report that Ethereum trades constitute nearly half of their volume. Any regulatory adjustments could transform Japan’s crypto market by simplifying trading and attracting more participants.
Featured image from Travel+Leisure, chart from TradingView
