The cryptocurrency market in Japan may be on the verge of a booming phase as the government is considering classifying Bitcoin as a financial product. According to renowned crypto analyst Willy Woo, this move could spark a new wave of demand from both individual and institutional investors.

Bitcoin Could Be Subject to a Tax Rate as Low as 20%

Currently, cryptocurrency gains in Japan are taxed under the progressive personal income tax system, with rates as high as 43%–55% for individuals earning over approximately $57,000 per year. This has deterred many investors from entering the market.

However, under the new plan, if Bitcoin is recognized as a financial product, the tax rate on Bitcoin profits and transactions will be fixed at 20% – similar to stocks and traditional financial instruments. This will simplify the tax system and make investing in Bitcoin much more attractive.

Not Just Bitcoin, Over 110 Crypto Assets Also Stand to Benefit

Notably, this plan is not limited to Bitcoin. Around 110 other types of crypto assets are also expected to be classified as financial products. This opens up significant opportunities for the entire altcoin market in Japan, enabling substantial capital inflows into the ecosystem.

However, income from staking will be an exception and will continue to be taxed according to the current personal income tax rates.

Impact on Businesses and Institutional Investors

Willy Woo also believes this change will affect companies holding Bitcoin, such as Metaplanet – a Bitcoin treasury business in Japan. Previously, the company benefited from tax advantages, but when individual investors are also subject to the 20% tax rate, this advantage will no longer be significant.

When Will the Policy Become Effective?

According to the current roadmap, Japan needs to pass legislation through parliament before the new tax policy takes effect. The 20% tax on crypto is expected to officially come into force from 2028.

With these transformative changes, Japan could become one of the most crypto-friendly markets in the world. If approved, this would be a major boost for Bitcoin and altcoins, opening a new growth cycle in the Land of the Rising Sun. 🚀