Catenaa, Friday, January 02, 2026- Japan is moving to reduce taxes on certain cryptocurrencies to a flat 20%, a major drop from the current rate of up to 55%, officials announced as part of the 2026 tax reform blueprint.
The measure is intended to encourage domestic crypto trading and align profits from specified digital assets with equities and investment trusts.
The tax reduction will apply only to “specified crypto assets” managed by businesses registered under the Financial Instruments Business Operator Registry.
While major cryptocurrencies such as Bitcoin and Ethereum are expected to qualify, the exact criteria for businesses and assets remain under review.
Under the new rules, losses from trading these virtual currencies can be carried forward for up to three years starting in 2026, allowing investors to offset future gains.
The law also opens the door for investment trusts that include cryptocurrencies and coincides with Japan’s first XRP exchange-traded fund launch.
Authorities plan to introduce two additional ETFs offering exposure to selected crypto assets.
Government officials and financial firms say the revised framework aims to increase investor confidence and streamline regulatory oversight under the Financial Instruments and Exchange Act.
Analysts note that the tax change may attract new participants to Japan’s crypto market while supporting the growth of regulated trading platforms.
Investors have responded positively, signaling potential increases in trading volume and broader adoption of digital assets in the country. The reform is part of Japan’s broader effort to modernize its financial sector and provide clearer rules for emerging investment opportunities.
