Japan is set to implement a major overhaul of its cryptocurrency tax framework, moving toward a flat 20% levy on digital asset gains—aligning crypto taxation with the treatment of stocks and investment trusts, according to Nikkei. The reform, backed by the government and ruling coalition, represents the most significant policy shift for the country’s crypto sector in years and signals regulators’ growing recognition of digital assets as a mainstream investment class.

Under the proposal, crypto profits would be placed within Japan’s separate-taxation regime, where certain types of income are assessed independently from salaries or business revenue. The uniform 20% rate would be split between the national and regional governments, at 15% and 5% respectively. Lawmakers are expected to formalize the change in the 2026 tax reform package, set for completion at the end of December.

The update would mark a substantial easing for retail traders, who currently face progressive tax rates that can climb as high as 55%—a burden long viewed as a key factor discouraging domestic trading activity.

The move comes amid a steady pickup in regulated market activity. The Japan Virtual and Crypto Assets Exchange Association recently reported that spot trading volumes on local exchanges surpassed $9.6 billion in September, reflecting growing demand within the country’s tightly supervised crypto ecosystem.