Japan is preparing to overhaul crypto taxation by introducing a flat 20% tax on trading profits—placing digital assets on equal footing with equities and other mainstream investments. First reported by Nikkei, this move signals a major shift in regulatory posture and may resolve a longstanding pain point for domestic investors.

Crypto gains will no longer be lumped with primary income (salary/business), but taxed under a separate regime: 15% to the central government and 5% to prefectural/municipal authorities. The reform is slated for inclusion in Japan’s 2026 fiscal policy framework, expected to be finalized by year-end.

Currently, crypto profits face progressive taxation up to 55%, depending on total income—a structure widely criticized for stifling liquidity and distorting investment behavior. By contrast, stock and fund returns have long been taxed at 20%.

Proponents argue lower rates will boost market participation, spur blockchain-driven innovation, and—over time—increase aggregate tax revenue. This reflects broader recognition that crypto has matured into a legitimate asset class, not merely a speculative niche.

Data confirms strong retail engagement: 8 million active accounts and September spot trading volume of ¥1.5 trillion (US$9.6 billion). Asset managers—including Nomura, Daiwa, and Mitsubishi UFJ—are now forming internal task forces to prepare post-reform products, such as crypto ETFs and retail funds.

Yet operational hurdles remain: fair price benchmarking, rapid asset sourcing, secure custody, and volatility management still pose real-world challenges.

VECS Commentary
This reform is a bold step toward mainstream financial normalization of crypto. By aligning tax treatment, Japan isn’t just attracting institutional capital—it’s signaling trust: crypto is no longer a gray zone, but a recognized, regulated investment instrument. Still, success hinges on two conditions: (1) administrative simplicity—reporting must be frictionless for retail users; and (2) enforcement consistency—no loopholes for cross-border tax arbitrage. If implemented with integrity, this could become the global gold standard for fair, forward-looking crypto regulation.

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**This news was obtained and summarized from various sources on the internet.