Japanese investors are abandoning cryptocurrencies not because of volatility, but because of it

A recent survey revealed that Japanese investors are withdrawing from the cryptocurrency market, not because of price fluctuations, but because of complex tax requirements.

Japanese financial planning platform 400F conducted a survey of 894 respondents across the country In November about his customs in digital currencies. Among previous cryptocurrency holders, 22% cited difficulties with the tax system as their main reason for leaving. This went beyond price fluctuations, as 19% of previous investors cited fluctuations as the main reason for leaving the field of digital currencies.

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Administrative requirements overwhelm market fluctuations

Holders of existing digital assets report that volatility (61.4%) and tax complexity (60%) are almost equal challenges. In Japan, cryptocurrency earnings are classified as “miscellaneous income” and can be taxed at rates of up to 55% after local taxes. Investors must track each trade, calculate gains or losses in yen, and report them annually. For many, these administrative challenges outweigh the benefits – although 62.7% say… Create long-term wealth It is the main reason to invest, compared to 15.1% who prefer short-term speculation.

Investors using NISA and iDeCo, two popular accounts that are tax-advantaged for shares and withdrawals, are particularly affected by the complex reporting requirements for cryptocurrencies. Their experience with traditional and simple investment accounts makes the paperwork for digital assets seem heavier.

Increasing calls for regulatory changes

The majority of respondents (70.6%) describe their inclination towards risk as neutral, aiming to balance risk and return. However, about 40% of these “neutral” investors say they could take more risk in cryptocurrencies if Japanese regulators clarify their approach to digital assets and taxes.

This call for clearer regulation comes with reports that Japan’s Financial Services Agency (FSA) Plan to reclassify digital currencies As a regular financial product and reducing the tax rate above 20%. Such changes can significantly reduce the tax burdens currently considered grounds for abandonment Digital currency market.

Where do investors in Japan look for information?

The survey finds that respondents rely almost equally on specialized or official media (63%) and social platforms or influencers (58.9%) to get Cryptocurrency information.

Overall, the results indicate that Japanese investors’ interaction with cryptocurrencies depends more on government regulation and administrative procedures than on price fluctuations. Streamlined tax systems may unlock further growth for cryptocurrencies in the large Japanese economy.