In a significant shift in cryptocurrency taxation, Japan is set to slash the tax rate on certain digital assets, including Bitcoin and Ethereum, to a fixed 20% by 2026. This change is part of a broader tax reform aimed at fostering the nation's crypto market and aligning the taxation of specified crypto assets with equities and investment trusts. Tax rates are currently as high as 55%.
Under the new framework, traders will have the option to carry forward trading losses for up to three years, offering a financial cushion against future gains. Additionally, the inclusion of cryptocurrencies in investment trusts and the launch of Japan's first XRP exchange-traded fund, with plans for additional crypto ETFs, signal a welcoming environment for digital asset investors.
Officials project that the reduced tax rate, coupled with clear regulatory guidance under the Financial Instruments and Exchange Act, will stimulate investor involvement, elevate trading volumes, and consolidate the growth of Japan's regulated digital asset market.
