Haciyev Reşit 
In Japan, where cryptocurrencies are widely used by the public, a new era is beginning for digital assets. While the Japanese government is preparing a comprehensive reform of cryptocurrency taxation, this move closely concerns both individual investors and institutional players. The draft regulations that have been announced aim to place the crypto market within a clearer and more predictable framework.
Japan Prepares for Cryptocurrency Tax Reform
Japan’s Liberal Democratic Party and the Japan Restoration Party shared the main outlines of the tax system reform for fiscal year Reiwa 8 (2026) with the public on December 19. In the draft proposal, cryptocurrencies are defined as financial products that contribute to national asset formation. This approach shows that digital assets are no longer seen as temporary or marginal investment vehicles, but as a permanent part of the financial system.
Cryptocurrencies Gain Financial Product Status
Under the proposed regulation, spot crypto transactions, derivatives, and crypto ETFs will be subject to a separate taxation regime similar to that applied to equities and other traditional financial products. Within this system, investors would be allowed to carry forward trading losses for up to three years. This would enable crypto investors to offset past losses against future profits.
This approach brings crypto investors in Japan closer to the tax framework applied in equity markets and is viewed as a step that could encourage long-term investment strategies.
However, the reform draft does not cover all crypto-related activities. Income-generating activities such as staking and lending are expected to remain under the existing tax system. NFTs are not explicitly mentioned in the reform text, meaning that NFT-related income is likely to continue being taxed under the “miscellaneous income” category for now. This suggests that uncertainty may persist for some time, particularly for investors active in the NFT ecosystem.
New Reporting Obligations for Crypto Exchanges
With the new system, crypto exchanges operating in Japan are expected to submit user transaction reports directly to tax authorities. While this step implies stricter tax compliance, it also aims to create a more transparent and auditable market structure for investors.
“This reform could make the crypto market more transparent and sustainable. However, it is critical for investors to be prepared for the transition period.” – Japanese Financial Expert
Experts emphasize that before the reform comes into force, investors should keep detailed transaction records and ensure their historical data is complete and well organized.
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