Japan Reclassifies XRP, Other Cryptos as Financial Products

Japan has reclassified XRP and other cryptocurrencies as financial products, rather than primarily payment instruments. This change could reshape how digital assets are taxed, regulated, and accessed.

Wealth-focused commentator Kamilah Stevenson notes that Japan's move would place crypto closer to stocks and bonds within a familiar framework for regulated financial institutions.

The shift in classification is significant because it can determine how banks, funds, and retail investors use cryptocurrencies. Previously, Japanese crypto investors faced tax rates as high as 55% on gains under a miscellaneous-income approach.

However, the new framework would move crypto gains to a flat 20% rate, matching the treatment of stock profits. Investors could also offset future gains with prior losses due to a three-year loss carry-forward provision.