Japan Virtual Currency Tax Reform Confirmed, Moving Toward Same Treatment as Stocks

The Japanese government is pushing for a major policy shift regarding virtual currency investments in its 2026 fiscal year tax reform. According to the reform plan recently announced by the Liberal Democratic Party and the Japan U.Shinshinto, virtual currencies will be officially recognized as financial products contributing to public asset formation, and a separate taxation system at the level of stocks and investment trusts will be introduced.

**How Will Virtual Currency Transactions Be Taxed?**

The core of the reform plan is to systematically classify and tax all transactions related to virtual currencies. Spot transactions, derivatives such as futures and options, and virtual currency spot ETFs will each be designated as independent taxable categories. Furthermore, funds or financial products investing in virtual currencies are also planned to be included within the scope of tax benefits.

A particularly noteworthy point is the regulation allowing trading losses to be carried forward for three years, which appears aimed at alleviating investor burdens caused by short-term stop-loss strategies.

**Unclear Areas Require Future Detailed Regulations**

However, the current reform plan does not specify detailed standards for certain areas. There are no explicit tax guidelines for new types of virtual currency transactions such as NFT trading, staking rewards, or DeFi lending interest. It is expected that detailed implementation rules for these areas will be clarified through further discussions in the future.

**Considering Tax Payment Obligations for Overseas Remittances**

Additionally, the Japanese government is reviewing measures to require prepayment of taxes when profits generated from virtual currencies are transferred abroad. This is interpreted as an effort to prevent international tax evasion and enhance transparency.