Crypto profits in Japan are heavily taxed, making Bitcoin treasury company stocks more attractive.

Earlier this year, at the Bitcoin Asia event in Hong Kong, there was a growing sense of open disappointment toward crypto treasury management companies (DAT) worldwide, as their performance often lagged behind the value of the assets they held.

“Just buy an ETF,” said Matt Cole, CEO of Strive Asset Management, sharing on stage during a panel discussion at the conference.

However, the situation in Japan is different. DATs listed in Tokyo have consistently outperformed Bitcoin, thanks to preferential tax treatment for stocks compared to crypto. These excess returns are no coincidence but reflect Japan’s tax incentives: direct income from crypto is heavily taxed, while gains from stocks benefit from a lower tax rate and can offset losses.

In Japan, crypto gains are considered miscellaneous income, combined with salary and other income sources, and are subject to progressive taxation up to 55% for top earners. These gains cannot be offset against losses from other sources and cannot be carried forward to future years. In contrast, gains from stocks fall into a separate tax category, taxed at around 20%, allowing for loss offsets and simpler reporting procedures. This difference creates a clear financial incentive: holding Bitcoin directly incurs high taxes, while holding shares linked to Bitcoin allows profits to be taxed at a lower rate.

Investors who want exposure to Bitcoin without facing the 55% tax rate are forced to buy shares in companies holding BTC. Meanwhile, US companies operate in a neutral tax environment, so their share prices rarely exceed the value of the BTC they hold.

At the same time, the Tokyo Stock Exchange and Japan Exchange Group are increasingly concerned about the volatility their own tax regime has helped create. They have begun warning companies about “backdoor” listing tactics, tightening audits, and cautioning that the DAT model may pose risks that retail investors do not fully understand.

Similar discussions are taking place in Hong Kong, India, and Australia, as regulators worry about this structure and advise listed companies to think carefully before adopting it.

In Japan, DATs may soon lose their appeal if the national tax authorities change how crypto is taxed. If the tax advantage disappears, DATs listed in Tokyo will quickly lose their edge, and the advice to “just buy an ETF” could become sound even for the Japanese market.

Vuong Tien