Japan’s Financial Services Agency is exploring a significant shift in how crypto holdings are taxed, potentially treating them as financial assets rather than income. This move could dramatically reduce the tax burden on crypto investors. Currently, crypto profits are taxed as high as 45% for top earners, but the proposed change could align them with the 20% flat rate for capital gains on securities.

The agency believes this adjustment could encourage investment by treating crypto assets as a means for the public to expand wages and household assets. Despite the potential of cryptocurrencies in boosting individual wealth, their use among private investors remains limited, according to a recent government report.

This proposed reform comes as Japan reassesses its stance on crypto taxation, prompted by a previous high tax rate that led to an exodus of crypto companies from the country. The government’s ongoing review aims to foster a more favorable environment for crypto innovation and retention of companies within the nation.

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