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Crypto Law/Level VIII · Around the world/8.3 Asia and the Gulf/Lesson 2

Japan

How Japan taxes crypto gains today, the 20% flat-rate regime scheduled for 2028, and the exchange failures and offshore-platform crackdowns that shaped its strict rules.

Education, not legal, tax or investment advice. Crypto law differs between countries and states and changes often. Check the current rules where you live with a qualified lawyer or tax adviser before you act.

The lean path

The cheapest, lowest-tax, simplest and most private route the law allows, best first. Each step names the rule it rests on and the condition that keeps it lawful.

  1. Not selling costs nothing: unrealised gains are not taxed. When you do sell, an employee with one fully withheld salary and other income of 200,000 yen or less need not file a national return (NTA No. 1900). Catch: swaps count as sales.
  2. Every crypto-to-crypto swap is a taxable disposal under the National Tax Agency’s crypto FAQ, valued at the coin’s market price. Catch: individuals default to the total average cost method unless they file an election for moving average.
  3. From 1 January 2028, if implemented, gains on listed crypto sold through Japanese licensed exchanges are scheduled to be taxed at 20.315% separately. Catch: private wallets, overseas exchanges and decentralised platforms stay under progressive rates of up to 55.945%.
  4. Use an exchange on the Financial Services Agency’s registered list, whose segregation rules protect customers better than offshore apps. Catch: registration did not prevent the DMM Bitcoin theft of 4,502.9 bitcoin in 2024, so consider self-custody for long-term holdings.

MaterialsLesson 3.3.5, on Japan’s Payment Services Act and the July 2026 move of crypto into the Financial Instruments and Exchange ActThe Financial Services Agency’s list of registered crypto-asset exchange service providersA year’s trade history from each exchange or wallet used, split between Japanese registered exchanges and everything else

Wonder

  1. Why can a Japanese resident pay more than half of a large crypto gain in tax?
  2. Will the new 20% rate apply to tokens held in a private wallet or traded on a foreign exchange?
  3. After Mt. Gox and Coincheck, how did exchanges in Japan still get hacked?

Explore

  1. Lesson 3.3.5 explains how Japan licenses exchanges under the Payment Services Act and why crypto is moving under the Financial Instruments and Exchange Act (FIEA). This lesson covers tax, enforcement and what changed. Under current rules, an individual resident’s crypto gains are classed as business income or, more often, miscellaneous income. Either way they are added to the person’s other income and taxed at progressive rates, which reach a combined national and local maximum of 55.945%. For a large gain, more than half can go in tax, which is the background to the reform described next.
  2. The ruling parties’ Outline of the 2026 Tax Reform, released in December 2025, proposes a fixed-rate separate taxation of 20.315% for income from certain crypto-asset transactions. It reaches only crypto-assets listed on a Japanese licensed exchange and sales made through such exchanges; transactions through private wallets, overseas exchanges or decentralised platforms stay under the old progressive rules. Losses within the new regime could be carried forward for three years, but only against gains taxed in the same regime. The change is tied to the FIEA amendment, and law firm commentary reports it is scheduled to apply to transactions on or after 1 January 2028. Treat details as subject to implementing rules.
  3. Japan’s strict rules grew out of failure. The Tokyo exchange Mt. Gox, once the dominant bitcoin venue, suspended trading on 24 February 2014 and filed for bankruptcy protection on 28 February 2014, reporting about 850,000 bitcoins missing; about 200,000 were later found in an old wallet. Its chief executive, Mark Karpelès, was not convicted of embezzlement. On 14 March 2019 the Tokyo District Court found him guilty of falsifying data and gave him a suspended 30-month sentence. The creditors’ claims moved to civil rehabilitation proceedings. Japan’s exchange registration law, passed in 2016, followed the collapse.
  4. Registration did not end the hacks. After the Coincheck loss of January 2018 (lesson 3.3.5), the Japanese exchange DMM Bitcoin lost 4,502.9 bitcoin, worth about $308 million, in May 2024. On 23 December 2024 the FBI, the US Department of Defense Cyber Crime Center and Japan’s National Police Agency attributed the theft to North Korean cyber actors tracked as TraderTraitor. The case shows the limit of Japan’s cold-storage rule: keeping most customer assets offline reduces exposure but does not remove it, and the exchange still bears the loss. Customers of a registered exchange are better protected by segregation rules than customers of an unregistered one, but not immune.
  5. Enforcement also targets offshore platforms that serve Japanese residents without registration. In February 2025 the Financial Services Agency (FSA) asked Apple and Google, for the first time, to remove from their Japanese app stores the apps of five unregistered overseas exchanges. It had earlier sent warnings to 21 such exchanges, which some treated as a formality. The FSA cited three concerns: customer assets may be unprotected if such an exchange fails; some offered leverage above 100 times a deposit, against a legal limit of twice; and reports of suspected money laundering in crypto transactions rose to 19,344 in 2023 from 7,096 in 2018.
  6. Put together, Japan is moving from a payment-law model to a securities-style model, with insider-trading rules, disclosure duties and, if the tax reform proceeds, a lower rate that rewards trading through domestic registered venues. The design is deliberate: tax treatment follows the regulated channel. For a resident, where a trade happens may decide whether a gain is taxed at about 20% or at up to about 56%. A practical check: sort each disposal in a year’s records by venue, Japanese registered exchange, foreign exchange, or self-custody wallet, and keep acquisition costs for every token, because both regimes need them.

Key facts

  • Under current Japanese rules, an individual’s crypto gains are taxed at progressive rates with a combined national and local maximum of 55.945%.
  • Japan’s Outline of the 2026 Tax Reform, released in December 2025, proposes 20.315% separate taxation for crypto-assets listed on and sold through Japanese licensed exchanges.
  • Japan’s proposed separate crypto taxation is reported to apply to transactions on or after 1 January 2028.
  • Mt. Gox filed for bankruptcy protection in Tokyo on 28 February 2014.
  • The Tokyo District Court convicted Mark Karpelès of falsifying data on 14 March 2019 and gave him a suspended 30-month sentence.
  • On 23 December 2024 the FBI and Japan’s National Police Agency attributed the May 2024 theft of 4,502.9 bitcoin from DMM Bitcoin to North Korean actors tracked as TraderTraitor.

Exercise nine, six, three, one

9CollectList up to 9 crypto transactions or holdings from a real or imagined Japanese resident’s year, noting the venue for each.
6ClusterSort them into 6 groups: domestic registered exchange sales, overseas exchange sales, self-custody transfers, crypto-to-crypto swaps, income received in crypto, and items with missing cost records.
3DistillReduce the 6 to 3 points that would most change the tax result if the 2028 regime takes effect.
1CrystallizeWrite 1 sentence on how the venue of a trade could change its tax rate in Japan.

Fact check

Dates, figures and claims checked against the published sources listed below.

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