Japan's authorities recently took a major step—officially classifying Bitcoin as a financial product, with a key change in the tax treatment.

What was the previous situation? High-income groups faced a marginal tax rate of up to 55% on crypto asset trading. In other words, a profit of 1 million yuan would mean paying 550,000 yuan in taxes. How outrageous is this rate? It’s nearly three times higher than the 20% tax rate on stock trading.

This time, Japan’s reform set the Bitcoin trading tax rate at 20%. The figure may seem modest, but it could significantly stimulate the market. High-net-worth investors and retail traders who previously worried about taxes and fees are likely to be much more motivated to buy. Simply put, earning 1 million yuan now only requires paying 200,000 yuan in taxes, a change that could influence decision-making.

Interestingly, a listed company, Metaplanet, has been leveraging crypto holdings for tax optimization. With this move, their arbitrage space has been largely eliminated. Additionally, Japan has classified over 110 cryptocurrencies, and staking yields are now taxed at higher rates, which may somewhat impact the appeal of certain tokens’ ecosystems.

From a broader perspective, the question arises: will this trigger a reallocation of funds in East Asia? Will retail investors in Korea also become restless and follow suit? Moreover, as Bitcoin is classified as a legitimate financial product in Japan, will its recognition within traditional financial systems increase? How much fuel can this add to the overall crypto narrative? No one can say for sure.

What do you think of this move? Is it a genuine policy benefit or just a market hype?