Japan is preparing for a comprehensive reform of cryptocurrency taxation. On December 19, the Liberal Democratic Party of Japan and the Reconstruction Party of Japan introduced the tax system reform for the 8th Reiwa fiscal year (2026).
The proposed draft defines cryptocurrencies as financial products contributing to the formation of national assets and envisages the introduction of a separate tax system for these assets.
Under the proposal, spot transactions of cryptocurrencies, derivatives and crypto-ETFs will be subject to a separate tax regime, similar to that of stocks and other financial products. This would allow investors to carry forward their trading losses for three years, meaning these losses could be deducted from profits made in subsequent years. This would offer crypto investors a tax framework closer to that of the stock market.
However, the reform bill does not cover all crypto transactions. It states that income-generating transactions such as staking and lending can remain subject to the current tax system. NFTs are not explicitly mentioned in the reform text; Therefore, NFT income should continue to be taxed under “other income” for the time being.
The new system requires cryptocurrency exchanges to submit user transaction reports directly to tax authorities. This step involves stricter tax compliance rules for investors. Experts say investors regularly prepare their transaction statements before the reform takes effect, which will be essential for a smooth transition.
*This does not constitute investment advice.
