Japan's 2026 tax reform will lower the crypto rate to 20%, allow XRP and other crypto ETFs, and allow traders to carry forward their losses for three years.
summary
- Japan will impose a flat 20% tax on specified crypto assets such as Bitcoin and Ethereum starting in 2026, just like stocks and investment trusts.
- The new rules allow three years of loss carryforwards and pave the way for XRP and additional crypto ETFs under the Financial Instruments and Exchange Act.
- Officials hope the tax cuts and clearer oversight will attract investors, increase trading volumes and support Japan's regulated digital asset market.
Japan has announced plans to lower taxes on certain cryptocurrencies from the current maximum of 55% to a flat 20% as part of its 2026 tax reform blueprint, according to government officials.
Japan lowers virtual currency tax
The measure is aimed at boosting cryptocurrency trading in the country and aligning profits from certain digital assets with stocks and mutual funds, officials said.
The tax reduction is only applicable to “specified crypto assets” managed by businesses registered in the Financial Instruments Business Registry. According to the announcement, major cryptocurrencies such as Bitcoin and Ethereum are expected to be eligible, but the exact criteria for businesses and assets are still being considered.
Under the new rules, losses from trading these cryptocurrencies will be carried forward for up to three years starting in 2026, allowing investors to offset future gains.
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The law also allows investment trusts that include cryptocurrencies, coinciding with the launch of Japan's first XRP exchange-traded fund. The agency plans to introduce two additional ETFs that will provide exposure to selected crypto assets, officials said.
Government officials and financial institutions said the framework reforms are aimed at boosting investor confidence and streamlining regulatory oversight under the Financial Instruments and Exchange Act.
Analysts said the tax change could attract new participants to Japan's crypto market while supporting the growth of regulated trading platforms.
Investors have responded positively, indicating the potential for increased trading volume and wider adoption of digital assets in the country, market sources said.
Officials said the reforms are part of Japan's broader efforts to modernize its financial sector and provide clearer rules for new investment opportunities.
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