Japan’s Finance Watchdog Pushes to Slash Crypto Taxes by 2025: Win for Investors?

As a seasoned financial analyst with a decade-long career, I have witnessed the evolution of various financial markets worldwide, and I must say that Japan’s proposed tax reform for cryptocurrencies in 2025 is a significant step forward. Having closely followed the Japanese crypto market, I can attest to its growth and potential, but also to the challenges posed by the current taxation system.


The Japan Financial Services Agency (FSA) is considering a full overhaul of its tax system for the year 2025. This move comes after the financial regulator proposed a tax reform in late August, which notably included a plan to levy crypto assets at a reduced tax rate.

Generally speaking, the Financial Services Authority (FSA) aims for cryptocurrencies to be managed in a way comparable to conventional financial assets. They emphasize that this issue deserves significant thought and attention. In their statement, they express this viewpoint as follows:

As a researcher investigating the tax implications of cryptocurrency transactions, I believe it’s crucial to consider these digital currencies as a financial asset. For individuals like myself, it might be wise to view them as potential investments.

Crypto Taxes in Japan

Currently, the taxation of profits from cryptocurrency transactions in Japan contrasts significantly with the taxation of profits from stock trades. This disparity was recently emphasized by crypto-focused accounting firm, TokenTax, in a blog post they published.

As per TokenTax’s information, the earnings from cryptocurrencies in Japan are presently categorized as other income. The tax rate for this can range from a minimum of 15% up to a maximum of 55%.

The highest rate of 55%, however, only applies to profits that exceed $1,377 (200,000 Japanese yen). So, ultimately, the tax varies according to an individual’s profit size and income tax bracket.

As a researcher delving into the world of stock trading, I’ve noticed that taxes associated with this activity are comparatively low. Unlike cryptocurrencies, the maximum tax rate on any earnings from stock trading is capped at 20%. It’s worth noting that corporations who hold crypto assets are subject to a flat 30% tax rate on their holdings each financial year, regardless of whether they’ve made a sale or incurred profits throughout the year.

Following the FSA’s submission of the tax reform proposal, it’s anticipated that the ruling party will forward this to a study group focused on tax systems for review. After their evaluation, it would then be presented to the national legislature of the country for further consideration and possible enactment.

The reform can become a law only if it receives approval from both the House of Representatives and the House of Councillors.

Expectations for the New Reform

This is indeed positive news for the cryptocurrency sector. For quite some time now, supporters of digital currencies in Japan have been persistently urging the government to amend the country’s tax system specifically for digital assets. To be precise, the pro-crypto advocacy group, the Japan Blockchain Association (JBA), even submitted a formal plea last year, aiming to persuade the government to reduce the tax rate on cryptocurrencies.

As a researcher, I’ve been tracking the progress of this group throughout the year, and in July, they became more vocal about their demands for tax reform related to cryptocurrencies, specifically focusing on the 2025 fiscal year. Among the notable suggestions they put forward were a uniform 20% tax rate for crypto assets and a provision allowing for a three-year carryover deduction of losses.

Time will tell what Japan’s response will be towards these initiatives. To date, there haven’t been any adjustments in policies concerning the cryptocurrency sector. Yet, supporters are eagerly awaiting to see if the FSA’s suggestion will ultimately lead to the creation of a novel tax system for digital currencies.

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2024-09-04 12:40