Japan is preparing major changes to its cryptocurrency tax system in 2026, but only certain digital assets will be subject to lower tax rates.
This reform brings cryptocurrencies closer to stocks and ETFs, and marks a shift towards tighter regulation and institutional access.
Bitcoin and Ethereum are likely to be in the spotlight as Japan restructures how cryptocurrencies fit into its financial system.
Japan is close to resolving one of the biggest problems with virtual currencies in the country: taxes. But a closer look reveals that this change doesn't apply to everyone.
Under its 2026 tax reform blueprint, Japan plans to reduce crypto capital gains tax from a maximum of 55% to a flat 20%. The move puts certain digital assets on the same footing as stocks and mutual funds, a long-standing demand from investors and industry groups.
This reform is not new, but it is now clear that How limited is its scope?.
Only “designated” crypto assets are eligible
The reduced tax rate applies only to “specified crypto assets” handled by registered businesses under the Financial Instruments and Exchange Act (Financial Instruments and Exchange Act).
Approximately 105 cryptocurrencies currently listed on registered exchanges are expected to fall into this category, likely including major assets such as Bitcoin and Ethereum.
Assets outside this framework have no benefit. The blueprint does not explicitly include NFTs, and income from staking or lending remains a gray area under the current proposal.
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Bringing virtual currency closer to stocks
Another notable change is the introduction of a three-year loss carryforward scheme for eligible crypto trades. This allows investors to offset future profits with past losses, which is already a standard rule in Japanese stock and foreign exchange trading.
However, losses from cryptocurrency trading remain locked in and cannot be used to offset gains from other asset classes.
Focus on ETFs and access to institutional investors
The tax reform also supports Japan's broader push to integrate cryptocurrencies into traditional finance. Mutual funds holding cryptocurrencies will be allowed, and the country has already launched its first XRP exchange-traded fund.
The final rules are subject to legislation passed by Congress ahead of fiscal year 2026. For now, Japan's direction is clear. Cryptocurrencies are welcomed, but only within a strictly regulated framework.
