Japan's tax reform considers adopting a separate taxation system for virtual currencies, supporting a three-year loss carryforward deduction

The Liberal Democratic Party of Japan and the Japan Innovation Party proposed in the 2026 fiscal year tax reform outline to classify virtual currencies as financial products that contribute to public asset accumulation, and are considering applying the same separate taxation system for virtual currency income as for stocks and investment trusts.

According to the outline, spot trading, derivatives trading, and ETFs of virtual currencies are listed as separate taxable items, and losses from virtual currency trading can be carried forward for three years. In addition, financial products invested in virtual currencies are also included. Currently, the proposal does not explicitly mention the taxation details for NFTs and reward transactions such as staking and lending. The outline also mentions that future gains from virtual currencies may be subject to taxation when transferred overseas.