A recent survey reveals that Japanese investors are stepping back from the crypto market, not due to price volatility but because of complex tax requirements.
Japanese financial planning platform 400F surveyed 894 participants nationwide in November about their cryptocurrency habits. Among former crypto holders, 22.2% cited difficulties with the tax system as their primary reason for leaving. This surpassed price swings, with 19.4% of ex-investors naming volatility as their main reason for exiting the crypto space.
Administrative Demands Eclipse Market Fluctuations
Current digital asset holders report both volatility (61.4%) and tax complexity (60%) as nearly equal challenges. In Japan, crypto gains are classified as “miscellaneous income” and can be taxed at rates up to 55% after local taxes. Investors must track each trade, calculate yen-denominated gains or losses, and report them annually. For many, this administrative challenge outweighs the benefits—despite 62.7% stating long-term wealth creation is the main reason for investing, compared to 15.1% prioritizing short-term speculation.
Investors using NISA and iDeCo, two popular tax-advantaged accounts for stocks and retirement, are particularly affected by complex crypto reporting requirements. Their experience with straightforward traditional investment accounts makes the paperwork for digital assets seem even more burdensome.
Rising Calls for Regulatory Changes
A majority of respondents (70.6%) describe their risk appetite as neutral, aiming to balance risk and return. Still, about 40% of these “neutral” investors say they would take on more crypto risk if Japanese regulators clarified their approach to digital assets and taxes.
This demand for more precise regulation comes as reports circulate that Japan’s Financial Services Agency (FSA) plans to reclassify crypto as a standard financial product and reduce the top tax rate to 20%. Such changes could significantly ease the tax burdens currently cited as reasons for leaving the crypto market.
Where Japan’s Investors Seek Information
The survey finds that respondents rely almost evenly on specialist or official media (63%) and social or influencer platforms (58.9%) for crypto information.
Overall, the findings suggest Japanese investor engagement with crypto depends more on government regulation and administrative procedures than on price volatility. Streamlined tax rules may unlock greater crypto growth in Japan’s sizable economy.
