This morning, after reviewing the market trends, I stumbled upon the news from Japan's Financial Services Agency, and I almost knocked my tea cup onto the table — they plan to impose a 20% uniform tax on cryptocurrency transactions and also promote the issuance of ETFs! This isn't just a policy adjustment; it's clearly a bombshell dropped on the crypto space with a warm breeze.
Having been in the crypto space for ten years, I have long felt the impact of Japan's crypto taxation. A few years ago, while drinking with friends trading in Tokyo, they sighed about taxes. At that time, Japan categorized crypto income as 'miscellaneous income', with a progressive tax rate that became more severe the more you earned, reaching up to 55%. One friend made a decent amount from small coins in 2021 but lost over half of it to taxes when filing, which made him so mad that he moved most of his positions to stablecoins, saying 'earning is just working for the tax office.' What’s more frustrating is that losses couldn’t offset gains back then; taxes were heavy on gains, but losses had to be borne by the individual, causing many ordinary players to avoid crypto trading altogether, which cooled the domestic market for quite a while.
This new wave of reforms is simply a way to loosen the reins for traders. Referencing the treatment of stocks, a separate tax level will impose a 20% uniform tax, and losses can be carried forward for three years — what does that mean? It means if you lost money this year, and made money next year, you can first offset last year's losses before paying taxes. For example, if you lost 50,000 this year and made 100,000 next year, under the new rules, you'd only pay taxes on a profit of 50,000, which is significantly less than before. With this tax reduction, players who previously held onto their money in fear are likely to slowly enter the market; the domestic market will come back to life to some extent.
Even more aggressive are the ETF and regulatory adjustments. I witnessed ETFs in the U.S. in 2019, and when the Bitcoin ETF came out, many friends who only bought stocks got their first taste of crypto through ETFs — once the compliant channel opened, traditional financial money flowed in like a burst dam. If Japan really pushes for crypto ETFs, ordinary citizens holding retirement and investment money won’t need to learn private keys or remember wallet addresses; they can just tap a few times on a brokerage app to get involved. How much new capital will this bring in?
There's also a detail worth mentioning: by 2026, legislation will reclassify cryptocurrencies from being considered a 'means of payment' under the (Payment Services Act) to 'financial products' under the (Financial Instruments and Exchange Act). This isn't just a change of name; it's legitimizing cryptocurrency. Previously, some people said, 'Cryptocurrency is a speculative tool,' but now that it's classified as a financial product, regulatory details will be clearer, and institutions will feel more confident entering the market — banks and asset management companies, which previously feared crossing regulatory lines, will now have clear rules, and we might see Japanese funds start to allocate crypto assets as early as next year.
Ten years ago, when I first got into cryptocurrencies, I often heard people say, 'Cryptocurrency needs to wait for compliance,' but back then, most countries either cracked down hard or ignored it. Japan's recent actions have set a global example: it's not about blocking but about streamlining rules to cultivate the market. In the short term, Japan's local exchanges and small cryptocurrencies may heat up first; in the long term, if Europe and Southeast Asia follow suit and implement similar tax reforms and compliance policies, the crypto market might truly usher in a 'compliance bull market' — not artificially inflated through speculation, but a market supported by real capital and players.
Did you see this news? A few of my Japanese friends have already shared their positions in a small group this morning, saying, 'Finally, we can move some spare cash over.' Do you think that with Japan leading the way, other countries will follow? If a wave of compliance really comes, which directions should we keep an eye on in advance? Let's discuss in the comments — I'll help you sort it out.
We will continue to track global cryptocurrency regulatory dynamics, bringing you timely interpretations of their impact on market trends, allowing you to position accurately in the crypto space!
