Japan Cuts Crypto Tax Rate to 20%, Reclassifies Cryptocurrencies Under FIEA

Japan's parliament has passed legislation to reclassify cryptocurrencies under the Financial Instruments and Exchange Act (FIEA), paving the way for a 20% tax rate on eligible crypto gains. The bill, which cleared the Upper House on July 15, transfers oversight of crypto trading from the Payment Services Act to the FIEA.

The reforms establish new business regulations for crypto trading and impose insider trading rules that prohibit trading based on undisclosed material information involving crypto assets traded on domestic platforms. The Financial Services Agency will treat crypto assets as financial products distinct from traditional securities, subjecting them to separate regulations.

A key provision of the legislation is a reduced tax rate of 20% for qualifying crypto gains, down from the current maximum rate of 55%. This comprises 15% national income tax and 5% local inhabitant tax. The tax changes are expected to apply from January 1, 2028.