Japan to Cut Crypto Tax as BOJ Rate Hike Can Pressure Risk Assets AllinCrypto December 4, 2025
The Bank of Japan (BOJ) is expected to raise rates to 0.75% at its upcoming December meeting, the first increase in almost a year.
While a moderate hike signals confidence in controlling inflation in the yen, it could also create renewed pressure on risk assets, including Bitcoin and the broader crypto market in the mid-term.
Higher interest rates tend to strengthen currency and pull capital toward yield-bearing assets like bonds and savings. For investors, an increase in rates could turn into a rotation out of speculative assets, tightening liquidity.
Bank of Japan Rate Hike Could Affect Risk Assets Like Bitcoin
Crypto, known for its volatility, often reacts negatively to central bank movements. Since the BOJ announcement, Bitcoin fell from $91k to the mid-80,000s before recovering.
In the mid-term, BOJ rate increases could turn into slower inflows into riskier assets from institutional traders.
Possible reversals could be recovered quickly towards the end of the year. On December 10, the Federal Reserve is due to announce an interest rate cut.
If the FED follows through, it would bring much-needed relief to digital assets like crypto and the stock markets, possibly leading to a stronger rally into the end of the year.
Japanese Crypto Investors Will Get Relief From Tax Reform
The BOJ’s rate hike comes at the same time as Japan is preparing a potential tax cut for digital asset investors.
Lawmakers in the National Diet have signaled support for a proposal from the Financial Services Agency (FSA) to cut crypto taxes from 55% to a flat 20% rate, placing digital assets on an equal footing with traditional assets.
The move could help expand retail participation in crypto markets thanks to the welcoming tax rate. High taxes may have deterred Japanese investors from fully realizing crypto gains or participating in newer investments.
A 20% flat rate would align Japan with other crypto-friendly regions around the world and could entice both domestic and foreign Web3 startups to build and scale in the region
The timing of a tax break would coincide with the BOJ’s interest rate hike. Lower taxes create a clear incentive for investors to consider long-term crypto investments in an industry that’s starting to realize itself in the region.
The post Japan to Cut Crypto Tax as BOJ Rate Hike Can Pressure Risk Assets first appeared on AllinCrypto.
