In a major development for blockchain and cryptocurrency businesses, Japan has revised its corporate tax policy to eliminate the controversial 30% tax on unrealized crypto gains for digital asset issuers. This change marks a significant shift in the country’s regulatory stance, signaling stronger support for Web3 innovation and domestic blockchain growth.
Alongside this landmark tax reform, Japan has also introduced new rules on stablecoin issuance and strengthened anti-money laundering (AML) compliance—effective as of June 2025. Together, these updates position Japan as a more competitive player in the global crypto landscape.
👉 Discover how Japan’s new crypto rules are shaping the future of digital finance.
No More 30% Corporate Tax on Unrealized Crypto Gains
Under previous Japanese tax regulations, cryptocurrency issuers were required to pay a 30% corporate tax—known locally as corporate inhabitant tax—on the market value of tokens they held, even if those tokens had not been sold or monetized. This meant companies faced substantial tax liabilities based solely on price fluctuations of their own issued digital assets, despite having no actual cash inflow.
This policy was widely criticized by industry leaders and legal experts as counterproductive, placing an unfair burden on startups and discouraging blockchain innovation within Japan. Many firms reportedly chose to relocate operations overseas to avoid these stringent tax obligations.
However, after months of deliberation, Japanese lawmakers have officially revised the interpretation of corporate tax law. As confirmed this week, companies will no longer be taxed on unrealized gains from self-issued cryptocurrencies starting from April 2025. The update is part of the Ryōwa 5 Fiscal Year Tax Reform Charter, a broader initiative led by the ruling Liberal Democratic Party (LDP) to modernize Japan’s financial regulations.
It’s important to note: this exemption applies only to tokens issued by the company itself. If a firm holds digital assets issued by other entities—such as Bitcoin, Ethereum, or third-party utility tokens—those holdings remain subject to capital gains taxation upon disposal.
This nuanced approach reflects Japan’s effort to support native blockchain development while maintaining fiscal responsibility around speculative investments.
Stablecoin Issuance Now Restricted to Licensed Financial Institutions
Another key policy that took effect on June 1, 2025, is Japan’s strict ban on non-bank entities issuing yen-pegged stablecoins. Under the revised Payment Services Act, only licensed financial institutions—including banks, trust companies, and registered agent banks—can issue regulated stablecoins.
The goal is clear: ensure stability, protect consumers, and integrate digital currencies into the existing financial infrastructure with proper oversight.
This move aligns Japan with international regulatory trends but also creates a high barrier to entry for fintech startups and decentralized projects. However, it opens doors for traditional financial giants to lead in the digital currency space.
For example, Mitsubishi UFJ Financial Group (MUFG), Japan’s largest bank, recently announced partnerships with several overseas stablecoin issuers. Their new platform, Progmat Coin, aims to launch yen- and foreign-currency-backed stablecoins across major public blockchains such as Ethereum, Polygon, Avalanche, and Cosmos.
By combining institutional credibility with blockchain interoperability, MUFG and similar players are poised to drive adoption of regulated digital money in payments, remittances, and cross-border transactions.
👉 See how financial institutions are entering the stablecoin race with compliant solutions.
Stricter Anti-Money Laundering Rules: Travel Rule Now Enforced
Also effective June 1, 2025, Japan has fully implemented the Travel Rule for virtual asset transfers—a critical component of global AML frameworks set by the Financial Action Task Force (FATF).
Under this rule, any financial institution or Virtual Asset Service Provider (VASP) facilitating crypto transactions must collect and transmit identifying information about both the sender and recipient. This includes:
- Full legal name
- Account number (if applicable)
- Physical or email address
- Date of birth (in some cases)
This data must be shared with the receiving institution when transferring certain types of digital assets—including stablecoins pegged to fiat currencies or commodities like gold—as well as major cryptocurrencies such as Bitcoin and Ethereum.
Failure to comply can result in severe penalties, including fines and criminal charges. Regulators emphasize that these measures are designed to increase transparency, prevent illicit financing, and bring crypto transactions in line with traditional banking standards.
While privacy advocates have raised concerns about data handling, Japanese authorities stress that proper safeguards are in place to protect user information within secure systems.
Frequently Asked Questions (FAQ)
Q: Does Japan still tax cryptocurrency profits?
A: Yes. While unrealized gains on self-issued tokens are no longer taxed at the corporate level, realized profits from selling any cryptocurrency are still subject to taxation under Japan’s capital gains framework.
Q: Can fintech startups issue stablecoins in Japan?
A: Not directly. Only licensed financial institutions such as banks or trust companies can issue regulated stablecoins. Startups may partner with these entities but cannot operate independently in this space under current law.
Q: What is the Travel Rule and why does it matter?
A: The Travel Rule requires VASPs to share customer identity information during crypto transfers. It enhances regulatory oversight and helps combat money laundering, making Japan’s crypto ecosystem safer and more compliant internationally.
Q: Are foreign-issued stablecoins allowed in Japan?
A: Yes, but they must comply with AML/KYC requirements when used through registered Japanese exchanges or service providers. However, only domestically issued stablecoins by authorized institutions are considered legal tender equivalents.
Q: How does Japan’s crypto tax reform affect global investors?
A: While the tax exemption applies primarily to Japanese-registered issuers, it boosts investor confidence in Japan’s pro-innovation stance, potentially attracting more Web3 ventures and venture capital into the market.
Q: Is personal crypto trading taxed in Japan?
A: Yes. Individuals who trade or earn cryptocurrency must report gains as miscellaneous income and pay taxes accordingly, with rates varying based on total annual income.
👉 Learn how global crypto regulations impact your investment strategy today.
Final Thoughts: Japan Builds a Regulated but Innovation-Friendly Crypto Ecosystem
Japan’s latest wave of cryptocurrency reforms demonstrates a balanced approach—supporting technological advancement while enforcing strong consumer protections and financial integrity.
By removing the 30% corporate tax on unrealized gains for self-issued tokens, Japan removes a major obstacle for domestic blockchain startups. At the same time, restricting stablecoin issuance to trusted financial institutions ensures monetary stability. And with full enforcement of the Travel Rule, Japan strengthens its position as a compliant player in the global financial system.
These coordinated changes suggest that Japan is not stepping back from crypto regulation—but rather stepping forward with clearer, smarter rules designed for long-term growth.
For entrepreneurs, investors, and developers eyeing Asia’s crypto landscape, Japan is once again emerging as a jurisdiction worth watching closely.
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