Who Benefits from the 20% Separate Taxation on Cryptocurrencies? BCCC Taxation Committee Points Out

BCCC Taxation Committee Kickoff Event Session Report

Who Benefits from the 20% Separate Taxation on Cryptocurrencies? BCCC Taxation Committee Points Out

Yagihashi Yasunori × Murakami Yuichi × Okabe Noritaka × Arasawa Fumihiro

The Blockchain Promotion Association (BCCC) held the kickoff event for its newly established "Taxation Committee" in Tokyo on September 15. Yagihashi Yasunori, a tax accountant and chairman of the committee, pointed out that when trying to use cryptocurrencies, stablecoins, and DeFi (decentralized finance) in business, the accounting and tax processes become complicated, leading to a barrier to social implementation due to the "hassle factor." He emphasized that discussions regarding the separate taxation expected to start in 2028 are not concluded and called for organization that aligns with the realities of payments and remittances.

Yagihashi Yasunori
Chairman of BCCC Taxation Committee
Representative of Fasio Consulting Tax Accountant Corporation

Murakami Yuichi
Vice Chairman of BCCC Taxation Committee
Director of Murakami Yuichi Certified Public Accountant Office

Okabe Noritaka
Vice Representative Director of BCCC
Chairman of Stablecoin Promotion Committee
Vice Chairman of DeFi Committee
Representative Director of JPYC Co., Ltd.

Arasawa Fumihiro
Chairman of BCCC DeFi Committee
Representative Director of xWIN Co., Ltd.

Hirano Yoichiro
Representative Director of BCCC
President of Asteria Corporation

The Issue of "Not Just Ending with Separate Taxation"

At the beginning, Hirano Yoichiro, the representative director, gave a greeting. This year marks the 10th anniversary of BCCC since its establishment in 2016.
Hirano Yoichiro
In the early days, we were always discussing what blockchain is. I believe everyone gathered here today feels that we have finally entered the stage of social implementation. The fact that taxation is becoming a topic means that it is starting to be used in society.
Therefore, this taxation committee is not about asking for lower taxes. We aim to comprehensively consider what the taxation system should look like in an era where digital becomes the norm and to bring forth proposals.

Next, Chairman Yagihashi Yasunori explained the committee's policy. Yagihashi has been involved in cryptocurrency trading since around 2016 and has developed and provided the profit and loss calculation app "Crypto Link." He stated that the enforcement of the revised Payment Services Act, the establishment of the revised Financial Instruments and Exchange Act, and the strengthening of the Financial Services Agency's system and institutional development are steadily progressing, but pointed out that there are still gaps in the taxation system.
Yagihashi Yasunori
Until now, discussions have mainly focused on taxation systems based on investment and holding. Many people believe that since separate taxation will be implemented with this tax reform, the discussion is over. However, that is just a matter of personal taxation being slightly organized. What is now required is a taxation system that arises in the context of corporate activities such as payments, remittances, fundraising, and reward payments.
Tax processing has not been clearly defined or is complicated. If we say to switch from bank transfers to payments using stablecoins, and both accounting and tax processing become cumbersome, it will not be implemented.
Note: The revised law transferring the regulation of cryptocurrency transactions from the Payment Services Act to the Financial Instruments and Exchange Act was established on July 15, 2026, and promulgated on July 23 of the same month. The regulations related to crypto assets will be enforced on a date specified by government ordinance within one year from the promulgation date, and some will be enforced earlier. In terms of taxation, a separate taxation system for capital gains from specific crypto assets was established in the tax reform for the fiscal year 2028. The tax rate is 20.315%, which includes a 15% income tax and a 5% individual resident tax, plus a special reconstruction income tax, and capital losses can be carried forward for three years. The application is set to start from the year following the enforcement date of the revised Financial Instruments and Exchange Act.

End-of-Period Valuation and Gas Fees: Issues Faced by Businesses

Yagihashi specifically raised the accounting and tax issues faced by businesses.
Yagihashi Yasunori
Currently, it is required to evaluate crypto assets at market value at the end of the period. Now that it will fall under financial products, there is a debate about whether it should be mandatory to evaluate at market value at the end of the period.
Gas fees during remittances are also an issue. It is only required to calculate the costs at the market value at that time, but it will become a huge number of calculations. When using a cheap chain, the gas fee for one transaction can be in the range of 1 yen, and sometimes even below 1 yen. Is it acceptable to aggregate such small amounts, and do we need to convert everything? If we do not organize this, the hassle factor will take precedence.

Yagihashi concluded his policy explanation with words that indicate the committee's position.
"Of course, it is the government that constructs the system. From the perspective of businesses, we want to summarize what would make it easier for us and engage in activities that propose those ideas."
He emphasized that the committee is still at the starting point.
"We are still at a zero-base start, and we hope to hear your opinions and think together about what issues or inconveniences are arising, and make proposals accordingly."
Next, Vice Chairman Murakami Yuichi took the stage. As a certified public accountant who has been involved in the cryptocurrency taxation field for 5 to 6 years, he raised practical challenges he has encountered.
Murakami Yuichi
When I engage in practical work, I feel that there are many issues. The points raised by Yagihashi are one of them, but there are still no notifications from the National Tax Agency regarding the details of DeFi. There are still areas where it is unclear how to handle them in practice.
As a certified public accountant, I also see from the accounting perspective that when listed companies hold cryptocurrencies, it can become quite challenging in terms of security, management, and auditing. I hope that through BCCC, businesses and individuals can hold and operate crypto assets more securely.
Especially since the beginning of this year, AI has become extremely popular, and many people in the cryptocurrency field have shifted to AI. I think there was a time when Web3 was a hot topic, but now it seems that everyone in Web3 has turned to AI. I completely understand that feeling.
However, as AI continues to grow, transactions on the blockchain are well-suited for AI. Considering the future spread of stablecoins, the development of AI may actually synergize well with stablecoins, creating significant positive effects. I hope that while everyone is excited about AI, we can also promote stablecoins.

Note: The end-of-period valuation of crypto assets held by corporations was excluded from the market valuation under certain conditions in the tax reform for fiscal year 2023 for those issued and continuously held by themselves, and in the tax reform for fiscal year 2024 for "specific transfer-restricted crypto assets" issued by others. The latter is subject to restrictions on transfers, and the requirement is to go through the procedures for publication by the Japan Virtual Currency Exchange Association (JVCEA). If no evaluation method is selected, the cost method will apply. This has been applicable since the business year ending on or after April 1, 2024.

Who Does the 20% Separate Taxation Benefit?

In the latter half of the event, a panel discussion was held on the theme of "Current Taxation Issues and 'Pitfalls' for Investors." The moderator was Fumihiro Arasawa, chairman of the BCCC DeFi committee and representative director of xWIN, who began by discussing the start date of separate taxation.
Yasuhito Yagihashi
Separate taxation is scheduled to begin in 2028. The target will be transactions made after January 1 of that year, and the actual use of separate taxation will only be available from the tax return for the year 2028.
When Mr. Arasawa asked Mr. Murakami whether the 20% separate taxation would be beneficial for many individual investors, the answer was cautious.
Yuichi Murakami
The clear beneficiaries are those who have held Bitcoin or Ethereum in the past and have unrealized gains in the tens of millions or even hundreds of millions. For example, if someone is a company employee and makes a profit of 2 million yen from cryptocurrency in a year, they might actually end up paying more. The comprehensive taxation might have a lower tax rate, it seems.
While the maximum tax rate of 55% tends to attract attention, the tax rate is determined by combining annual income and cryptocurrency profits, so very few people actually reach that level. On social media, the maximum tax rate is often discussed, and it is mistakenly perceived that if you make a profit of 1 million yen, you have to pay 50%. However, when calculated, many cases fall around 15% or 18%, so I feel that it may not be very beneficial for most people.
Yasuhito Yagihashi
For someone with ordinary income from sources other than cryptocurrency profits, say around 5 million or 4 million yen, it is hard to say whether the 20% separate taxation is advantageous. It benefits those who originally have high income and effective tax rates. Therefore, those people tend to be more vocal.
Mr. Murakami also pointed out that regarding loss offsetting and loss carryforward, just because the system is established does not mean that benefits will be automatically received.
Yuichi Murakami
This is a key point, but cryptocurrency is under separate taxation. You can benefit from separate taxation by filing your own tax return. To offset losses or carry forward losses, you must properly declare the amount of loss incurred in the year you had a loss, stating that you had this much loss from cryptocurrency for the entire year. If you do not declare it, even if you make a profit the following year, you cannot offset it.
This can be quite cumbersome. The most challenging aspect of cryptocurrency is the calculation of gains and losses. Most people may have a rough idea that they made a profit of around 1 million yen this year or a loss of around 500,000 yen, but they do not know the exact amount of profit, and they have to do this every year.
The carryforward period is three years. However, since this is a system starting in 2028, losses incurred before 2027 will be disregarded.
Yasuhito Yagihashi
The parts that can be carried forward will also generally be subject to separate taxation, so it will likely be limited to transactions involving specific cryptocurrencies on domestic exchanges. This means that if losses occur from overseas transactions or from cryptocurrencies that are not classified as specific, they cannot be offset. It is not entirely a happy story.
Note: Under the new system, offsetting is limited to specific cryptocurrencies and cannot be offset against other income such as salary. To receive a carryforward deduction, it is required to continuously submit tax returns from the year the loss occurred and attach a detailed statement.

Defining 'Specific Cryptocurrencies' and Exchange Registration

The subject of separate taxation is limited to the transfer of "specific cryptocurrencies" on domestic exchanges. Anything else remains under comprehensive taxation. So what qualifies as a specific cryptocurrency? Mr. Yagihashi stated that this has not yet been solidified.
Yasuhito Yagihashi
According to the current draft, it is cryptocurrencies certified by organizations designated by the Financial Services Agency, and it is considered domestic transactions. This means those that have passed the examination of the Japan Virtual Currency Exchange Association (JVCEA), but the criteria for this have not been publicly disclosed as of now.
When Mr. Yagihashi asked if there were any concerns regarding recent announcements from industry groups, it was pointed out that there seems to be an increase in announcements of discontinuation of handling.
Yasuhito Yagihashi
I assume that they are likely undergoing a selection process. There was also a suggestion that one should not assume that if it is traded domestically, it is a specific cryptocurrency. Although it is said to start in 2028, that is not something that is currently guaranteed.
Another point of discussion is that exchanges handling specific cryptocurrencies will require licenses under the Financial Instruments and Exchange Act. The examination will be quite strict, and it is also being tested how many exchanges can pass this.
Note: Legally, specific cryptocurrencies are organized as those whose names are registered in the register of financial instruments business operators. The entry regulation for operators is a registration system rather than a licensing system, and the current cryptocurrency exchange business will change its name to "cryptocurrency trading business" after the transfer to the Financial Instruments and Exchange Act.

Barriers to Stablecoin Payments and Invoicing in the AI Era

When Mr. Arasawa asked Noritaka Okabe, who is involved with the Japanese yen stablecoin "JPYC," about the challenges, he replied that there are many, including accounting issues. Problems surrounding year-end audits still remain, and the know-how for audit procedures has not been sufficiently accumulated, and the number of people who can handle it is limited. Therefore, there can be cautious reactions to holding it, especially when publicly traded companies try to hold it.
Noritaka Okabe
Even with stablecoins, the audit procedures are the same. If it is in a bank account, you can just ask the bank for the balance, but if it is in your own wallet, it is not that easy.
There are also questions about how to handle small gas fees and what the tax implications are, which are not well understood. It is quite a headache for just 0.9 yen. For example, it is being considered for use in payments between AIs, but then the question arises of how to issue invoices. If the counterparty is a foreign AI agent, invoices cannot be issued, leading to discussions about having to pay consumption tax entirely. It feels like there are still many issues to be resolved if one actually tries to use it.
Companies, especially publicly traded ones, are required to be accurate even in small calculations. When Mr. Arasawa suggested that this point should be summarized and proposed in the tax committee, Mr. Yagihashi responded that determining how much detail is required for small transactions is one of the points that needs to be addressed.
Yasuhito Yagihashi
Usually, individuals do not think about whether transfer fees for cash transfers are expenses. When it comes to credit card or QR code payments, if it generates a profit and loss calculation that is not well understood for each transaction, will everyone use it?
However, there is a fundamental discussion about whether using stablecoins is more convenient and beneficial for stores, and I think this is one of the points that must be overcome. I think the final conclusion will be that small transactions can be overlooked, but even so, there must be a rationale behind it.