A significant portion of Japanese residents have indicated they would increase their investments in cryptocurrencies like Bitcoin (BTC), Ethereum (ETH), and other altcoins, contingent upon the government simplifying the current, stringent crypto tax regulations.
This key insight originates from a study titled “Japan Blockchain Association Advocates for Crypto Tax Reform to Boost Trading Volumes.”
When asked whether they currently owned BTC or other digital assets, 13% of the survey participants responded positively. (Image: Japan Blockchain Association representatives discussing their tax reform petition at the bitFlyer exchange headquarters on July 18, 2025, as seen on TV Tokyo Biz/YouTube).
The response to a subsequent question proved particularly revealing. Participants were asked: “If the government were to implement a flat 20% tax rate on crypto profits, would you purchase cryptocurrencies or increase your existing holdings?”
An impressive 84% of the 191 cryptocurrency holders surveyed answered “yes” to this proposition.
Furthermore, 12% of the 1,309 respondents who did not currently own cryptocurrencies also stated they would begin investing if Tokyo approved the proposed tax reforms.
Japanese government bond yields experienced a decline across various maturities on Friday, leading up to the highly anticipated Upper House election on Sunday. – Bloomberg (@business) discussing Capital Gains Tax Requests.
The JBA emphasizes that the survey data strongly suggests that adjusting tax policies would have a considerable and positive impact on trading activity within Japanese cryptocurrency exchanges.
Currently, Japanese law mandates that investors report any profits made from cryptocurrency activities as “miscellaneous income” on their income tax returns.
This classification can result in tax rates as high as 55% on crypto profits, depending on the individual’s overall income bracket.
Many other countries, however, treat crypto as a capital asset, subjecting profits to a standardized capital gains tax, often set at a flat rate ranging from 10% to 20% after a specific profit threshold is met. (Image: The Japanese Cabinet headquarters in Tokyo, Japan. Source: Mytho88 [CC BY-SA 4.0])
Reform advocates are pushing for the elimination of the current income tax structure for crypto gains and the adoption of a uniform 20% capital gains tax.
This proposal has garnered support from the JBA, key members of the ruling Liberal Democratic Party, and lawmakers from opposition parties.
Ultimately, the Financial Services Agency (FSA), the primary regulatory body, holds significant influence over cryptocurrency policy decisions in Japan.
Historically, recommendations made by the FSA to the Cabinet have consistently been enacted into law.
The JBA stated that cryptocurrencies are evolving beyond their initial purpose as a mere payment method and are increasingly being recognized as tools for wealth building.
This aligns with the FSA’s own plans to redefine crypto from a payment instrument to a legitimate investment asset.
The industry group affirms that they are intensifying their efforts to persuade the government to approve these tax reforms, potentially starting in the upcoming year.
The JBA, a prominent organization representing major Japanese crypto exchanges and blockchain companies, is driving this initiative. (Image: Trading volume on bitFlyer, a Japanese cryptocurrency exchange, over the past month. Source: CoinGecko)
On July 18th, the association confirmed that they had formally submitted a petition to the FSA, urging the agency to authorize tax reform for cryptocurrency profits.
The survey was conducted on April 24th and 25th of this year, targeting Japanese residents between the ages of 20 and 69. The sample comprised 60% males and 40% females, with an average participant age of 38.
Further questions posed by the JBA revealed that 75% of respondents would prefer that taxes be automatically deducted at the source, rather than requiring individuals to file separate tax declarations.
The JBA has also requested that the government allow cryptocurrency traders to choose their preferred method of tax payment, either through withholding at the time of sale or through annual tax filings.
Respondents who reported not currently holding any cryptocurrencies were also asked why they have refrained from investing.
Of this group, 8% cited excessively high tax rates as a deterrent, while a significantly larger 61% stated they lacked a sufficient understanding of the cryptocurrency market.
According to Japanese media, the FSA is currently “considering a proposal to integrate cryptoassets into the legal framework governing Financial Instruments and Exchange.”
The media outlet further clarified that if the transition receives approval, cryptocurrency assets will be formally recognized and classified as financial products.
The majority of the respondents identified themselves as working in the private sector. Students accounted for 5.3% of the survey pool, while 213 unemployed individuals also contributed responses. (Image: bitFlyer market pair volumes. Source: CoinGecko)
As of the time of this report, trading in ETH constitutes approximately half of the total trading volume on bitFlyer, one of Japan’s leading cryptocurrency exchanges.