Japan's financial regulator, the Financial Services Agency (FSA), has published its call for tax reforms for 2026.
The taxation of cryptocurrencies is a central part of these proposals, which also include the expansion of the NISA programme.
Japan wants a separate tax on cryptocurrencies
Currently, profits from cryptocurrency trading activities are subject to taxation within the consolidated income system in Japan. This means that earnings are added to income from employment and other business activities, thus being subject to progressive taxation. The current top marginal tax rate is 55%, although most taxpayers pay between 15% and 45%.
In the past, industry associations have criticised this policy, arguing that it discourages participation in Japan's digital asset industry. In its proposal for 2026, the FSA calls for the introduction of separate taxation for cryptocurrencies.
The suggested system, also supported by industry groups, would introduce a "statement-based capital gains tax" for crypto gains. These would be taxed at a flat rate of around 20%, in line with equity investment rules.
A separate taxation of capital gains is supported by the FSA, the Japan Cryptocurrency Exchange Association and the Japan Virtual Currency Investment Association. The FSA's tax proposal emphasises that the change would ensure 'fair tax fairness' and encourage households to participate in cryptocurrency investments.
Another measure included in the FSA's draft includes the possibility of carrying over tax losses from crypto exchanges in later years. Currently, Japanese taxpayers cannot carry forward losses from trading digital assets, and therefore cannot offset them against future gains. The FSA proposes a three-year loss carry-forward system, in line with what is already in place for equity investments. The introduction of such a measure could reduce risk for investors and encourage greater participation by the retail public.
The FSA will submit the proposal to the Ministry of Finance by the end of August, continuing to work with the government coalition's tax working group until the end of the year. Related legislation is expected to be passed in the Diet's 2026 regular session.
Expansion of the NISA programme
In addition to separate taxation on crypto capital gains, the FSA has also called for a expansion of the NISA programme to all generations, including minors and the elderly.
The NISA is a Japanese tax system that encourages households to save and invest by exempting a portion of income.
Currently, the NISA does not apply to cryptocurrencies, but the proposed expansion would extend the system's coverage to all age groups. This would give households more freedom to invest in stocks and funds, with more effective cash management and the ability to grow capital.
Like much of the world, Japan aims to modernise its tax systems to better support both digital and traditional assets. For the world's third largest economy, new tax rules could have a significant impact on both retail adoption and institutional entry into cryptocurrencies.
