XRP Surges 11% as Japan Moves to Lock In 20% Crypto Tax Cap

Japan Signals Institutional Pivot; XRP Leads JPY Inflows

Japan’s Finance Minister Satsuki Katayama declared 2026 a “digital year” during a Jan. 5 address at the Tokyo Stock Exchange, confirming the government is finalizing a tax reform package that would slash crypto levies from a prohibitive 55% to a flat 20%. The policy shift specifically targets “Specified Crypto Assets,” a regulatory green-list where XRP currently commands $21.7 billion in annual JPY on-ramp volume.

Markets reacted immediately. XRP rallied to $2.37 (+11.78%), outpacing broader market gains as traders priced in the structural advantage for Japan’s most popular altcoin.

The 55% to 20% Arbitrage

The proposed FY2026 tax reform replaces the current “miscellaneous income” classification, which hits high earners with progressive rates up to 55%, with a separate declaration taxation model aligned with equities. For institutional players and whales, this removes the single largest barrier to domestic liquidity deployment.

This regulatory moat is not theoretical. Data confirms XRP already functions as a primary liquidity bridge in the region:

“Japan’s 55% to 20% tax cut and crypto reclassification create institutional pathways where XRP already dominates $21.7 billion in JPY on-ramp volume and SBI’s remittance infrastructure.” . CryptoSlate Report

Institutional “Lock-In” Effect

The timing creates a distinct first-mover advantage. With the tax reform package scheduled for finalization by the end of January, domestic heavyweights like SBI Holdings, already deeply integrated with Ripple’s remittance rails, gain a compliant, tax-efficient environment to scale operations. The convergence of recent ETF inflows (absorbing nearly $1 billion globally in 18 days) and Japan’s favorable tax treatment effectively locks XRP into the country’s institutional infrastructure before competitors can establish similar footholds.