Japan's tax reform is considering adopting a separate taxation system for virtual currencies, supporting the carry-forward and deduction of losses over three years.

[Japan Considers Separate Taxation System for Virtual Currency, Supports 3-Year Loss Carryforward] According to Mars Finance, the Liberal Democratic Party and the Japan Restoration Party have proposed classifying virtual currencies as financial products that contribute to public asset accumulation in their 2026 fiscal year tax reform outline. They are considering applying the same separate taxation system to virtual currency income as to stocks and investment trusts. According to the outline, spot trading, derivatives trading, and ETFs of virtual currencies would be taxed separately, and losses from virtual currency trading could be carried forward for three years. Furthermore, financial products investing in virtual currencies are also included. Currently, the proposal does not explicitly mention tax details for NFTs and incentive-based transactions such as staking and lending. The outline also mentions that future earnings from virtual currencies may be subject to taxation when transferred overseas.