Japan is preparing to overhaul how it taxes cryptocurrency gains, moving toward a flat 20% levy that would bring digital assets in line with equities and investment trusts, per Nikkei.

The shift marks the country’s most significant policy update for the sector in years and reflects a growing view among regulators that crypto has matured into a mainstream investment class.

The proposal, backed by the government and ruling coalition, would place crypto profits under Japan’s separate-taxation framework, where certain income streams are treated independently from wages and business earnings.

That structure splits the 20% take between the national government and regional authorities at 15% and 5% respectively. The change is expected to be written into the 2026 tax reform package finalized at the end of December.

Retail traders currently face progressive taxation that can reach as high as 55% on crypto gains in a steep burden has long been cited as a deterrent to domestic activity.

The shift comes as Japan’s regulated exchanges report steady growth, with the Japan Virtual and Crypto Assets Exchange Association reporting with spot volumes on local exchanges crossing $9.6 billion in September.