Japan's 2026 Tax Reform Blueprint Outlines New Treatment for Crypto Assets

Japan's ruling coalition has unveiled a tax reform blueprint for 2026 that could significantly change how cryptocurrencies are taxed in the country. This report is based on information from CoinPost.

Key Takeaways

Japan’s 2026 tax reform proposal aims to reframe cryptocurrencies as financial assets.
Plans include separate taxation for certain crypto income types, moving away from the current system.
Gains from crypto trading and exchange-traded funds may be taxed differently, while staking and lending rewards remain under general tax rules.
The reform allows loss carryforwards for up to three years for qualifying crypto transactions.
Non-fungible tokens (NFTs) and certain crypto assets may not be clearly defined within the new plan.

Japan

The reform plan, published on December 19 by the Liberal Democratic Party alongside the Japan Innovation Party, signals a shift from viewing cryptocurrencies merely as speculative assets. Instead, it aims to classify these digital assets as financial products that can aid in long-term wealth creation.

CoinPost highlights that the blueprint considers establishing a classification system for cryptocurrencies similar to that used for traditional financial products, including stocks and investment funds.

Separate Taxation Considerations

Potential Changes in Crypto Income Taxation

A major aspect of the reform is the potential introduction of separate taxation systems for gains arising from spot crypto trading, derivatives transactions, and crypto-related exchange-traded funds (ETFs).

Should this proposal be implemented, it would represent a significant change from Japan's existing tax framework, which generally categorizes most crypto income as miscellaneous income, subjecting it to progressive tax rates.

However, the plan does not extend the separate taxation to all forms of crypto income. According to CoinPost, staking and lending rewards, which generate income primarily from holding cryptocurrencies rather than from price increases, are not addressed in the proposal. Consequently, these forms of income may still be subjected to general tax rules, depending on future legislative clarifications.

Loss Carryforward and Tax Offsetting Limits

Proposed Improvements for Tax Treatment

An additional key highlight of the proposal is the introduction of loss carryforwards for up to three years on eligible crypto transactions. This change aims to align crypto taxation practices closer to those applied to stocks and foreign exchange trading in Japan, where investors can use past losses to offset future gains.

Nonetheless, the reform does not propose broad cross-asset loss offsetting. Even if crypto gains are taxed separately, losses from crypto trading would not generally be offset against profits from stocks or other asset categories. Current plans suggest that income categories will still be kept separate.

Uncertainty Surrounding NFTs and Tax Categories

Clarification Needed for Non-Fungible Tokens

The tax reform blueprint does not specifically mention non-fungible tokens (NFTs), which could mean that income related to NFTs will continue to be taxed under existing general systems.

Moreover, the reform alludes to transactions involving "specified crypto assets," suggesting that only assets managed by registered entities under Japan's financial regulatory structure may qualify for this new tax treatment. This leaves a degree of ambiguity regarding the broader landscape of eligible crypto and digital assets.

In summary, Japan's proposed tax reform presents a notable shift in how cryptocurrencies may be treated in the near future, fostering a more comprehensive and structured approach to the taxation of digital assets.