Japan is set to introduce a flat 20% tax on cryptocurrency gains, a major change that would bring digital assets in line with equities and investment trusts. The proposal, backed by the government and ruling coalition, aims to move crypto profits into a separate-taxation framework, where income is handled independently from salaries and business earnings.

The reform marks one of Japan’s most significant updates to its crypto policy in years, signaling regulators’ growing recognition of digital assets as a mainstream investment class. Under the plan, the 20% tax would be split between the national government and regional authorities at 15% and 5% respectively, with the measure expected to be included in the 2026 tax reform package.

Retail traders currently face progressive tax rates that can climb to 55%, a major deterrent to domestic activity. The shift arrives as Japan’s regulated exchanges continue to expand, with the Japan Virtual and Crypto Assets Exchange Association reporting more than $9.6 billion in spot trading volume on local platforms in September.