Japan's cryptocurrency tax reform postponed until 2028, investor tax burden structure to change

【Chain Wen】Japan’s cryptocurrency tax reform process is proceeding more slowly than market expectations. According to the latest disclosures from political insiders, the new tax system plan originally scheduled to be implemented in 2027 in conjunction with the revision of the Financial Instruments and Exchange Act may actually be delayed until January 2028 before it can be officially launched.

This news is indeed somewhat surprising. Previously, the industry generally believed that since the parliament is expected to pass the amendment next year to include cryptocurrencies under the regulatory framework of the Financial Instruments and Exchange Act, the new tax system would also be pushed forward accordingly. But now it appears that government priorities have shifted—they are more focused on investor protection and plan to observe the actual situation after the new law is implemented before initiating tax reform. Officially, they say there is “currently a lack of basis to accelerate the process.”

For investors, this involves tax burdens. Japan’s current approach is to treat profits from cryptocurrency trading as “miscellaneous income,” which is combined with other income such as wages for comprehensive taxation, with a maximum marginal tax rate of 55% (including local taxes). This rate is indeed quite high.

The industry and investment communities have been calling for changes to this rule over the years, hoping to adopt a tax model similar to stock investments, where cryptocurrency would be taxed separately at a flat rate of 20%. This would indeed reduce the tax burden on investors and benefit market development. Now that the reform has been delayed, it means this expectation will have to wait a bit longer.