Japan’s Strict Crypto Tax Seen as Barrier, Flat 20% Rate Could Unlock Market Growth, Says Japan Blockchain Association Survey

Flat Tax Proposal Could Transform Japan’s Crypto Market

A recent nationwide survey reveals growing investor appetite for digital assets—if Japan simplifies its crypto tax system.

The findings highlight how a flat 20% tax on crypto trading profits could reshape the country’s digital finance landscape, potentially attracting both new and existing market participants.

Flat Rate Gains Strong Support Among Crypto Holders

The Japan Blockchain Association (JBA) polled 1,500 residents aged between 20 and 69 in April, finding that 13% currently own bitcoin, ether, or other cryptocurrencies.

Among those crypto holders, 84% said they would buy more if a flat 20% tax on profits were introduced.

(Translated screenshot of the survey results)

Even among those who do not currently own any crypto, 12% said they would consider entering the market under a friendlier tax regime.

(Translated screenshot of the survey results)

Japan’s current system categorises crypto earnings as “miscellaneous income”, with rates that can climb to 55% depending on the taxpayer’s annual income—far higher than capital gains tax rates seen in most other developed markets.

High Taxes Seen As Barrier To Growth

Entrepreneurs and investors have long criticised the existing framework, arguing it deters trading activity and pushes innovation offshore.

The JBA survey supports that view: while 61% of non-holders cited lack of understanding as the main reason for not investing, 8% said taxes were simply too high.

(Translated screenshot of the survey results)

To address these concerns, the JBA has formally petitioned Japan’s Financial Services Agency (FSA) to revise the tax system.

The group is advocating for a 20% flat tax on trading gains, aligned with capital gains rules used in other countries, and proposes giving taxpayers the option to settle taxes either at the point of sale or through their annual filings.

Major Exchanges Join Push For Reform

The JBA, which represents some of Japan’s largest crypto exchanges and blockchain firms, submitted its proposal on 18 July.

At the press event held at bitFlyer’s headquarters, executives reiterated that tax reform could unlock higher trading volumes and support Japan’s digital finance ambitions.

The association said,

“Cryptoassets are changing from a means of payment for the public to a means of asset accumulation,”

That shift in perception is also reflected in discussions underway at the FSA, which is reportedly considering reclassifying crypto from a payment method to an investment product under the Financial Instruments and Exchange Act.

Tax Collection Method Also Under Review

When asked how they preferred to pay crypto-related taxes, 75% of respondents said they would rather have taxes automatically deducted at the point of transaction instead of filing separate declarations—indicating a preference for streamlined compliance.

(Translated screenshot of the survey results)

Most survey respondents work in the private sector.

Around 5.3% were students, and 213 were unemployed.

The average age of those surveyed was 38, with 60% identifying as male and 40% female.

FSA Holds Key To Japan’s Crypto Tax Future

While lawmakers from both the ruling Liberal Democratic Party and the opposition have voiced support for a simpler tax framework, the FSA will play the decisive role.

Historically, all FSA recommendations on crypto regulation have been adopted into law by the Japanese Cabinet.

The financial regulator has yet to issue its verdict, but the JBA says it is “stepping up its efforts” to push for tax reforms to take effect next year.