A recent survey revealed that Japanese investors are exiting the cryptocurrency market not because of price fluctuations but because of complex tax requirements.
Japanese financial planning platform 400F surveyed 894 participants across the country about their cryptocurrency habits in November. Among former cryptocurrency holders, 22.2% cited difficulties with the tax system as the main reason for leaving. This exceeds price volatility, which 19.4% of former investors cited as the main reason for exiting the cryptocurrency space.
Current digital asset holders cite volatility (61.4%) and tax complexity (60%) as nearly equal challenges. In Japan, cryptocurrency gains are classified as “miscellaneous income” and can be taxed at a rate of up to 55% after local taxes. Investors must track every trade, calculate gains or losses in yen, and report them annually. For many, this management challenge outweighs the benefits – although 62.7% say long-term wealth creation is the main reason for investing, while 15.1% prioritize short-term speculation.
Investors using NISA and iDeCo, two popular stock and retirement tax-advantaged accounts, are particularly affected by complex cryptocurrency reporting requirements. Their experience with simple traditional investment accounts makes the paperwork for digital assets seem more onerous.
The majority of respondents (70.6%) described their risk appetite as neutral, aiming to balance risk and reward. Still, about 40% of “neutral” investors said they would take more cryptocurrency risks if Japanese regulators clarified their stance on digital assets and taxation.
This demand for more precise regulation comes amid reports that Japan’s Financial Services Agency (FSA) plans to reclassify cryptocurrencies as standard financial products and reduce the top tax rate to 20%. These changes could significantly reduce the tax burden currently cited as a reason to leave the cryptocurrency market.
The survey found that respondents relied almost equally on professional or official media (63%) and social or influencer platforms (58.9%) for crypto information.
Overall, the findings suggest that Japanese investor participation in cryptocurrencies depends more on government regulations and administrative procedures than on price fluctuations. Simplified tax rules could lead to greater cryptocurrency growth in Japan’s massive economy.
Read original story by Oihyun Kim, Japanese investors are exiting cryptocurrencies not because of volatility, but because of it, by beincrypto.com
