"Japan to Overhaul Virtual Asset Tax and Regulation… Moves to Standardize Tax Rate at 20%"

The Financial Services Agency (FSA) of Japan is pushing forward with plans to comprehensively overhaul the virtual asset (cryptocurrency) tax and regulatory framework. This revision includes a tax reform that treats virtual assets in the same way as stocks, as well as a legal amendment that would allow the introduction of crypto exchange-traded funds (ETFs).

According to BeInCrypto, a virtual asset-focused media outlet, the FSA is currently reviewing a plan to shift the current method of taxing virtual assets to treat them as financial products, in line with the taxation of stocks and bonds. Under the current system, profits from virtual assets are taxed at a progressive rate of up to 50%, but after the revision, the rate will be unified to a flat 20%. The plan also includes allowing the carry-forward of investment losses for three years. The authorities aim to implement these changes starting from the 2026 fiscal year.

The second key revision involves amending the Securities and Exchange Act to classify virtual assets as financial products. If approved, this would pave the way for various crypto ETFs, such as spot Bitcoin ETFs—currently not permitted in Japan. Experts expect that investors will be able to access virtual assets in a regulated environment via ETFs, thereby increasing market transparency.

Investor sentiment towards virtual assets is gradually expanding in Japan. According to a joint survey by Nomura Securities and Laser Digital, 54% of Japanese institutional investors plan to invest in virtual assets within the next three years, with an average allocation considered to be around 2~5% of assets.

On the other hand, holdings among retail investors in Japan remain relatively low. According to a study by the Cornell Bitcoin Club, 88% of Japanese citizens have never owned Bitcoin. The FSA aims to eliminate these barriers with the reforms and encourage households to integrate virtual assets as part of their long-term portfolios.

The media outlet explained, “This move aligns with the Japanese government’s stance on ‘New Capitalism,’ which aims to create a stable investment environment for all as part of investment-driven growth policies.”