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A growing number of Japanese investors say they’re ready to increase their cryptocurrency holdings—especially Bitcoin (BTC) and Ethereum (ETH)—if the government changes its tax laws. According to a recent national survey commissioned by the Japan Blockchain Association (JBA), proposed tax reforms could open the floodgates for domestic crypto trading.
The poll, conducted in April 2025, surveyed 1,500 Japanese residents between the ages of 20 and 69. It found that 13% of respondents currently hold cryptocurrencies. Among these crypto holders, a staggering 84% said they would buy more if the government introduced a flat 20% tax rate on crypto-related profits. Even among those who don’t currently own any digital assets, 12% indicated they would enter the market under such a tax regime.
These findings underscore the impact that Japan’s strict crypto taxation policies are having on investor behavior. Under the current system, crypto gains are categorized as “miscellaneous income” and taxed accordingly. This places investors in brackets as high as 55%, depending on their total income. In contrast, many other developed countries treat crypto profits as capital gains, taxed at much lower flat rates ranging from 10% to 20%.
Tax Burden Deters Potential Investors
The survey results offer compelling evidence that Japan’s tax framework is discouraging broader adoption of digital assets. While only 8% of non-investors said high taxes were the main reason they haven’t entered the crypto market, a far larger percentage—61%—claimed a lack of understanding was holding them back. Still, the idea that lower taxes could lead to significantly higher participation is gaining traction, particularly among active traders.
This is where the JBA hopes to make a difference. The organization, which includes major crypto exchanges like bitFlyer, is pushing for a major policy shift. On July 18, JBA executives submitted an official petition to Japan’s Financial Services Agency (FSA), asking regulators to consider applying a flat 20% capital gains tax on cryptocurrency profits. The goal is to align Japan’s crypto tax system with global standards, reducing the complexity and burden on retail investors.
JBA Steps Up Pressure for Reform
The JBA’s advocacy reflects a broader shift in how digital assets are perceived in Japan. According to the association, crypto is moving away from its origins as a payment method and increasingly viewed as an investment vehicle—a perspective also shared by the FSA. This alignment of views could prove crucial as the country considers amending its financial regulations.
The group is urging lawmakers and regulators to approve reforms that could be implemented as early as next year. The hope is that simplified tax rules will fuel trading activity and bring more legitimacy and transparency to the industry. In addition to the flat tax proposal, the JBA is also advocating for flexible payment options. It suggests allowing taxpayers to either pay their crypto taxes at the point of sale or file them during the annual tax declaration process. According to the survey, 75% of respondents prefer having taxes automatically deducted at the source.
Political and Regulatory Hurdles Remain
While support for reform is growing within the blockchain industry and among several members of the ruling Liberal Democratic Party, any change will ultimately require approval from the FSA. Historically, the FSA has played a dominant role in shaping Japan’s crypto landscape. Most of its recommendations have been accepted by the Cabinet and enacted into law.
So far, the FSA has not made a public decision about the latest proposal. However, there are signs that the agency is considering major changes. Japanese media outlet CoinPost reported that the FSA is reviewing a proposal to bring digital assets under the jurisdiction of the Financial Instruments and Exchange Act. If approved, this move would classify crypto as official financial products, a designation that could pave the way for more investor protections and streamlined regulations.
bitFlyer Trading Data Shows High Interest in Ethereum
Meanwhile, trading data from bitFlyer, one of Japan’s largest exchanges, shows robust market activity, particularly for Ethereum. At the time of writing, ETH trades accounted for nearly half of all volume on the platform, a clear indication of ongoing interest despite tax complications.
Interestingly, the survey also revealed insights into the demographics of current and potential crypto users. A majority of participants work in the private sector, while students made up just over 5% of the sample. Notably, 213 respondents were unemployed, suggesting that crypto awareness spans a wide economic spectrum.
Looking Ahead: Will Policy Catch Up with Public Sentiment?
The Japanese government now faces growing pressure to adapt its tax laws to the evolving crypto landscape. With more than 80% of current investors eager to increase their holdings under a revised tax scheme—and a notable portion of non-investors willing to jump in—the potential for expanded market participation is significant.
For now, the ball is in the court of Japan’s financial regulators. But if public opinion continues to shift and political will strengthens, 2026 could be the year Japan embraces a more modern approach to taxing digital assets.
