Tax Complexity Spurs Quiet Exodus From Japan's Crypto Market

Japan's crypto market is facing a quiet exodus among its investors, not due to the well-known volatility of digital assets, but because of the complex and burdensome tax system. A recent survey by 400F, a financial planning platform, found that 22.2% of former crypto holders cited tax complexity as their main reason for exiting the market-surpassing the 19.4% who left due to price swings. The findings highlight how administrative challenges, rather than market dynamics, are driving investor behavior according to the survey.

The survey, conducted in November 2025 with 894 participants across Japan, also revealed that current digital asset holders view volatility (61.4%) and tax obligations (60%) as equally significant concerns. However, the administrative burden of tracking trades, calculating yen-denominated gains or losses, and filing annual reports remains a major deterrent. These challenges are particularly pronounced for investors using tax-advantaged accounts like NISA and iDeCo, which are designed for traditional investments according to the findings.

Investors who use NISA and iDeCo benefit from simplified reporting for stocks and retirement accounts, making the more complex crypto tax requirements feel disproportionately burdensome.

The contrast has led to frustration among users who view crypto as a long-term wealth-building tool-62.7% of investors cited long-term growth as their primary motivation, compared to just 15.1% who focused on short-term speculation according to the survey.

Rising Calls for Regulatory Clarity

The survey results are pushing for regulatory changes that could make the crypto environment more investor-friendly in Japan. Approximately 40% of investors who describe their risk appetite as neutral-aiming for a balance between risk and return-said they would take on more crypto risk if Japanese regulators provided clearer guidelines on digital assets and taxation. This demand is timely, as reports suggest the Financial Services Agency (FSA) is considering reclassifying crypto as a standard financial product and reducing the top tax rate from 55% to 20%.

Such reforms could address the key pain point for investors and potentially attract more market participants. The current system, which classifies crypto gains as "miscellaneous income," subjects investors to high tax rates after local levies and requires meticulous reporting. For many, this complexity outweighs the perceived benefits, even for those who aim to build long-term wealth according to the findings.

Investor Information Sources and Market Outlook

The survey also found that Japanese crypto investors rely almost equally on specialist or official media (63%) and social or influencer platforms (58.9%) for information. This bifurcation in information sources underscores the growing mainstream acceptance of digital assets but also highlights the lack of centralized, government-sanctioned guidance. As a result, investors are often left to navigate a fragmented information landscape according to the report.

Despite the administrative hurdles, the findings suggest that regulatory clarity could unlock greater participation in Japan's crypto market. The country's large and sophisticated economy, combined with an existing interest in long-term wealth creation, presents a significant opportunity for growth. If streamlined tax rules are implemented, Japan could see a resurgence in crypto investment-particularly among investors who currently feel the system is too cumbersome according to the survey.