Japan’s 2026 tax reform will cut crypto rates to 20%, enable XRP and other crypto ETFs, and let traders carry losses forward three years.
Summary
- Japan will tax specified crypto assets like Bitcoin and Ethereum at a flat 20% from 2026, aligning them with stocks and investment trusts.
- New rules allow three-year loss carryforwards and pave the way for XRP and additional crypto ETFs under the Financial Instruments and Exchange Act.
- Officials expect lower taxes and clearer oversight to draw investors, lift trading volumes, and support Japan’s regulated digital asset market.
Japan announced plans to reduce taxes on certain cryptocurrencies to a flat 20%, down from the current rate of up to 55%, as part of the country’s 2026 tax reform blueprint, according to government officials.
Japan slashes crypto taxes
The measure aims to encourage domestic crypto trading and align profits from specified digital assets with equities and investment trusts, officials stated.
The tax reduction will apply only to “specified crypto assets” managed by businesses registered under the Financial Instruments Business Operator Registry. Major cryptocurrencies such as Bitcoin and Ethereum are expected to qualify, though the exact criteria for businesses and assets remain under review, according to the announcement.
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 permits 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, officials said.
Government officials and financial firms stated the revised framework aims to increase investor confidence and streamline regulatory oversight under the Financial Instruments and Exchange Act.
Analysts noted 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, according to market observers.
The reform is part of Japan’s broader effort to modernize its financial sector and provide clearer rules for emerging investment opportunities, officials said.
