Japan’s financial regulator mulls taxing cryptocurrencies as financial assets

A change in the regime could result in lower taxes for some cryptocurrency investors.

Japan’s Financial Services Agency said it’s worth considering whether cryptocurrency holdings should be taxed as financial assets rather than income.

“Regarding the tax treatment of crypto asset transactions, it is necessary to consider whether crypto assets should be treated as financial assets that should be the subject of investment for the public,” the agency wrote in a paper examining tax reform on Friday.

Any change could see higher-income cryptocurrency holders pay a lower tax rate. Currently, the country taxes cryptocurrency gains as income, which can be as high as 45% for individuals earning more than 40,000,000 yen ($276,000). Capital gains from sales of securities such as stocks face a flat rate of 20%.

"Cryptoassets are expected to contribute to the expansion of wages and the creation of family assets, but their use by individual investors is currently limited," the report notes.

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