Japan’s 2026 tax reform will cut crypto rates to 20%, enable XRP and other crypto ETFs, and let traders carry forward their losses for three years.
Summary
- Japan will tax specified crypto assets such as Bitcoin and Ethereum at a flat 20% from 2026, putting them on par with stocks and mutual funds.
- New rules allow loss carryover over three years and pave the way for XRP and additional crypto ETFs under the Financial Instruments and Exchange Act.
- Officials expect lower taxes and clearer supervision will attract investors, increase trading volumes and support Japan’s regulated digital asset market.
Japan has announced plans to cut 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, government officials said.
Japan cuts crypto taxes
The measure is aimed at encouraging domestic crypto trading and aligning profits from specific digital assets with stocks and investment trusts, officials said.
The tax relief will only apply to “specified crypto assets” managed by companies registered under the Financial Instruments Business Operator Registry. Major cryptocurrencies such as Bitcoin and Ethereum are expected to be eligible, although the exact criteria for companies and assets is yet to be revised, according to the announcement.
Under the new rules, losses from trading this virtual currency can be carried forward for up to three years from 2026, allowing investors to offset future gains.
The law also allows investment trusts that include cryptocurrencies and coincides with the first launch of Japan’s XRP exchange-traded funds. Authorities plan to introduce two additional ETFs that provide exposure to select crypto assets, officials said.
Government officials and financial companies said the revised framework aims to boost investor confidence and streamline regulatory oversight under the Financial Instruments and Exchange Act.
Analysts noted that the tax change could attract new participants to the Japanese crypto market while supporting the growth of regulated trading platforms.
Investors have responded positively, which market observers say indicates a potential increase in trading volume and broader adoption of digital assets in the country.
The reform is part of Japan’s broader efforts to modernize its financial sector and provide clearer rules for emerging investment opportunities, officials said.
