Japan reclassifies crypto as a financial asset, paves way for tax cuts

COINDESK ·

Lawmakers also approved the framework for reducing the current crypto tax burden from as much as 55% to 20%, although the lower rate is not expected to take effect until 2028. The tax-cutting proposal was introduced late last year with the support of the government and the ruling coalition. That new structure splits the 20% tax between the national government and regional authorities at 15% and 5%, respectively. The crypto rules will require cryptocurrency issuers to provide regular disclosures, while exchanges will face stricter investor protection and reporting requirements.

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The Japanese government has decided to reclassify cryptocurrencies as official financial assets and pursue tax cuts for them. This measure is expected to resolve institutional uncertainty surrounding digital assets and accelerate market entry for institutional investors. Investors should focus on the revitalization of cryptocurrency trading within Japan and the expansion of market size driven by global capital inflows.

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The move to officially recognize cryptocurrencies as financial assets signals a major shift in Japan's regulatory framework. By reducing the tax burden, the government is lowering entry barriers, which historically triggers higher trading activity and liquidity. This structural change is likely to encourage traditional financial institutions to offer crypto-related products, further cementing the status of digital assets in the Japanese market.

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