Japan Advances Bill to Reclassify Cryptocurrencies as Financial Products and Cut Tax Rate on Gains from 55% to 20%

Japan is advancing legislation that would redefine cryptocurrencies as financial products and reduce the applicable tax rate from 55% to 20%. The measure would place digital assets under the same regulatory framework used for stocks and bonds. The bill reclassifies cryptocurrencies so they are no longer treated as miscellaneous income subject to rates as high as 55%.

Under the proposed rules, gains would instead be taxed at a flat 20% rate, matching the treatment of other financial instruments. The legislation has cleared an initial procedural step in the Japanese parliament. No date has been set for final passage or implementation.

The change would affect how individual and institutional investors report cryptocurrency transactions to tax authorities. Current rules require taxpayers to calculate gains as miscellaneous income, which can push combined national and local rates above 50% for higher earners.

Officials have not released an estimate of the revenue impact or the number of accounts that would be affected by the lower rate.