Japan Announces Cryptocurrency Tax Reform Plan, Proposing Introduction of Separate Taxation System

**December 26th Update** On December 19th, Japan’s Liberal Democratic Party (LDP) and the Japan Innovation Party released an outline for the **FY 2026 (Reiwa 8)** tax system revision, proposing to classify cryptocurrency as a financial product supporting national asset formation and roll out a separate tax regime. Under the plan: - Spot trading, derivatives, and crypto ETFs will fall under the separate tax framework. - Trading losses may be carried forward three years for deduction, aligning with stocks and other financial assets. Key exclusions: - Income from crypto staking and lending will remain subject to current tax rules. - NFTs are not explicitly included in the reform and may still be taxed as miscellaneous income under comprehensive rules. Compliance changes: Exchanges will submit user transaction reports to tax authorities, meaning investors will face stricter compliance obligations. Experts advise investors to gather and organize transaction records ahead of time to prepare for the new system.