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Crypto analyst Willy Woo said that Japan’s plan to classify Bitcoin as a financial product could significantly increase demand in the country.
According to Woo, this regulation will simplify the tax regime for individual investors, making Bitcoin purchases more attractive.
According to Woo’s assessment, with Bitcoin being classified as a financial product, the tax rate on Bitcoin earnings and transactions will drop to 20%. Currently in Japan, crypto income is subject to a marginal income tax ranging from 43% to 55% for individuals with an annual income exceeding approximately $57,000. The new regulation aims to reduce the tax burden on investors by eliminating these high rates.
The analyst pointed out that this change will also have implications for the institutional side. According to Woo, Metaplanet, a Japan-based Bitcoin treasury company, will lose its current tax arbitrage advantage. This is because Bitcoin held by individual investors in their wallets will also be subject to a lower and clearer tax regime.
The planned regulation is not limited to Bitcoin alone. Approximately 110 different crypto assets are also expected to be classified as financial products under the same scope. However, Woo added that staking income would be an exception and would continue to be taxed via marginal income tax.
On the other hand, this tax advantage is not expected to come into effect immediately. In Japan, a legislative change that treats crypto assets more closely as financial products first needs to be passed by parliament. According to current expectations, the 20% tax is projected to come into effect from 2028.
*This is not investment advice.