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The FSA seeks to have crypto assets treated in a similar manner to traditional financial assets, saying that it is worth a considerable amount of consideration.
Japan’s Financial Services Agency (FSA) is looking to completely restructure the tax code for the year 2025. This follows after the financial regulator floated a request for tax reform in late August, whose major provision was to see crypto assets taxed at a significantly lower rate.
By and large, the FSA seeks to have crypto assets treated in a similar manner to traditional financial assets, saying that it is worth a considerable amount of consideration. The regulator wrote in part:
“Regarding the tax treatment of cryptocurrency transactions, cryptocurrency should be treated as a financial asset that should be an investment target for the public.”
Crypto Taxes in Japan
Presently, there is a huge disparity between the way profits made from crypto transactions are taxed in Japan and the way profits from stock trading are taxed. Crypto accountants TokenTax highlighted this difference in a recent blog post.
According to TokenTax, profits from crypto in Japan are currently taxed as miscellaneous income, and the rate goes from 15% to as high as 55%.
The highest rate of 55%, however, only applies to profits that exceed $1,377 (200,000 Japanese yen). So, ultimately, the tax varies according to an individual’s profit size and income tax bracket.
Interestingly, rates for taxes in stock trading are relatively low in comparison. Unlike crypto taxes, the highest tax rate any amount of profits from stock trading can incur is fixed at 20%. That is not to mention the fact that corporate crypto holders are held to the standards of having to pay a flat 30% tax rate on their holdings at the end of every financial year. This is whether or not they have made a single sale or profit throughout the year.
Given that the FSA has now submitted the tax reform request, the ruling party is expected to pass the same to a tax system research committee and then further down to the country’s national legislature to look into.
However, the reform will only be passed into law if the House of Representatives and the House of Councillors have both approved of it.
Expectations for the New Reform
This development is undoubtedly a welcome one in the crypto industry. For several years, crypto advocates in Japan have pushed vigorously to have the government revise the national tax regime for digital assets. As a fact, the pro-crypto lobby group, the Japan Blockchain Association (JBA), submitted a formal request last year that sought to move the hands of the government to lower the tax rate on crypto assets.
The group has continued its push this year. In July, it made more explicit requests for tax reform on crypto assets for the 2025 financial year. However, the major proposals that stood out were a flat 20% tax rate for crypto and a three-year loss carryover deduction.
It remains to be seen how Japan will react to these efforts. So far, though, there have been no policy changes for the crypto industry. However, enthusiasts watch with keen interest if the FSA’s proposal will eventually birth a new crypto tax regime.
Disclaimer: Coinspeaker is committed to providing unbiased and transparent reporting. This article aims to deliver accurate and timely information but should not be taken as financial or investment advice. Since market conditions can change rapidly, we encourage you to verify information on your own and consult with a professional before making any decisions based on this content.
Mayowa is a crypto enthusiast/writer whose conversational character is quite evident in his style of writing. He strongly believes in the potential of digital assets and takes every opportunity to reiterate this. He's a reader, a researcher, an astute speaker, and also a budding entrepreneur. Away from crypto however, Mayowa's fancied distractions include soccer or discussing world politics.
