Japan unveiled its 2026 tax reform blueprint, slashing the tax rate on specified crypto assets like Bitcoin and Ethereum to a flat 20%, down from the current progressive rate of up to 55%. The move aligns digital asset gains with those from stocks and investment trusts, aiming to boost domestic trading on regulated platforms.
Tax cut and loss carryforward details
The reduced rate applies only to crypto assets managed by businesses registered under the Financial Instruments Business Operator Registry. While Bitcoin and Ethereum are expected to qualify, exact criteria remain under review. Starting in 2026, traders can carry forward losses for up to three years to offset future gains, a provision designed to lower tax risk for investors.
ETFs expand: first XRP fund, two more to follow
The reform permits investment trusts that include crypto assets, coinciding with Japan's first XRP exchange-traded fund launch. Officials also plan to introduce two additional ETFs offering exposure to selected digital assets, all under the Financial Instruments and Exchange Act. Authorities believe clearer oversight will draw institutional capital and support regulated exchanges.
Market observers report a positive initial response from Japanese retail investors, with some exchanges seeing a surge in inquiries. Analysts note that the combination of a flat 20% tax and three-year loss carryforwards could encourage holders with significant unrealized losses to reposition their portfolios.