Japan Unveils Crypto Tax Rules, Sees Assets as Financial Products
Japan is set to become a more crypto-friendly nation, thanks to a new 2026 tax reform blueprint that proposes treating digital assets as financial products. With this new crypto tax rule, digital assets are considered similar to traditional financial assets such as stocks and investment funds.
Significantly, the Japanese government aims to create a more favourable environment for crypto investments and innovation, cementing its position as a global leader in the space. By providing clarity and certainty on crypto tax, policymakers hope to encourage greater participation in the crypto market.
New Crypto Tax Reform Plans Revealed in Japan
According to a CoinPost report, the Japanese government has planned to introduce separate crypto tax rules in 2026. The crypto tax reform plan, unveiled on December 19, marks a significant shift in the country’s approach to crypto and blockchain. Under the proposed rules, cryptocurrencies are considered financial products that can generate long-term wealth, rather than just speculative instruments.
With this move, the Liberal Democratic Party and the Japan Innovation Party intend to foster the country’s crypto ecosystem, introducing more favourable tax treatment and increased adoption of digital assets. The proposal also includes creating distinct tax rules for certain crypto income types, aligning with Japan’s capital markets framework. The key focus is on applying separate taxation rules for gains from spot crypto trading, derivatives, and crypto ETFs. This marks a divergence from the current system, where crypto income is taxed as miscellaneous income.
However, the proposal does not extend separate taxation to all types of crypto income. Notably, staking and lending rewards, which generate income through holding crypto rather than price appreciation, are not explicitly covered in the blueprint. As a result, these forms of income may continue to fall under general taxation rules, pending future legislative clarification on income categories.
This development comes on the heels of the Bank of Japan’s interest rate cut and the subsequent fall of the yen. While the central bank raised the rates to 0.75% in December to bolster the surge of the currency, the yen surprisingly dropped, defying expectations.
Unclear Future for NFTs and Unregistered Assets
It is worth noting that the crypto tax blueprint leaves uncertainty surrounding the treatment of non-fungible tokens (NFTs), as they are not explicitly mentioned in the proposal. This suggests that NFT-related income may continue to be taxed under the general system, rather than the new tax treatment outlined for “specified crypto assets.”
The reform appears to limit the new tax treatment to assets handled by registered operators under Japan’s financial regulatory framework. It potentially excludes unregistered or non-traditional assets from the benefits of the new tax regime. This lack of clarity may lead to ongoing uncertainty for NFT market participants and those involved with unregistered assets until further guidance is provided.
Another major element of Japan’s crypto tax proposal is the introduction of a loss carryforward provision for qualifying crypto transactions, allowing losses to be carried forward for up to three years. This move would align crypto taxation more closely with the treatment of stocks and FX trading in Japan, where investors can offset future gains with past losses.
Nonetheless, the proposal does not include broad cross-asset loss offsetting, meaning crypto losses would likely not be offset against profits from equities or other asset classes. Income categories are expected to remain separate, maintaining distinct tax treatment for different asset classes.
