Diet Completes Passage of Legislation Establishing 20% Tax on Crypto Gains
Japan’s House of Councillors approved Cabinet Bill 57 by majority vote on July 15, completing Diet passage of legislation that will move regulated crypto activity from the Payment Services Act into the Financial Instruments and Exchange Act. The measure establishes securities-market-style compliance rules and a combined 20% tax rate on qualifying crypto gains.
The 20% rate comprises 15% national income tax and 5% local inhabitant tax, applying only when investors sell eligible tokens through registered crypto businesses and the assets appear on Japan’s official register. Investors may carry forward unused losses for up to three years within the same tax-defined crypto category.
The Financial Services Agency’s framework adds disclosure and registration requirements covering crypto sales, issuer-controlled token offerings, borrowing, asset screening, custody, customer safeguards, and insider-trading controls. Crypto remains legally distinct from securities but will operate under comparable compliance structures.
Enforcement timing depends on a Cabinet order issued within one year of promulgation. If the Cabinet orders enforcement in 2026, tax rules begin January 1, 2027. If enforcement is ordered in 2027, the tax start date moves to January 1, 2028. Businesses must report customer identities and transaction details to tax authorities annually on January 31.
Crypto investment products require a separate amendment to the Investment Trusts Act enforcement order. The Financial Services Agency stated in October 2025 that domestic crypto ETFs were barred under the previous regulatory framework, signaling the agency’s intent to address this gap under the new structure.
The legislation follows fiscal 2026 tax amendments that passed as Law No. 12 on March 31.
