Crypto Inheritance in Japan: Tax Rules and Access Risks

Among the various troubles related to crypto assets (also known as virtual currencies), one that has been increasing in recent years involves the "death of the owner." More than a decade has passed since crypto assets first appeared, and it is no longer unusual for someone to pass away while still holding them.

In conclusion, crypto assets can be inherited. However, inheritance triggers tax obligations, and issues can also arise where the assets cannot be passed on because the access information is unknown.

This article organizes and explains how crypto assets are handled when the owner passes away, the inheritance procedures, the tax mechanics involved, and the troubles that can occur.

What Happens When the Owner of Crypto Assets Dies

Under Japanese law, crypto assets are treated as "property with economic value." The National Tax Agency (NTA) has stated the following regarding property subject to inheritance tax and crypto assets:

Under the Inheritance Tax Act, when an individual acquires property with an economic value that can be estimated in money through inheritance, testamentary gift (bequest), or gift, that acquisition is subject to inheritance tax or gift tax.

Because crypto assets are defined under the Payment Services Act (PSA) as "property value that can be used as consideration for payment to unspecified persons," when crypto assets are acquired from a decedent through inheritance, bequest, or gift, inheritance tax or gift tax is levied.

Reference: Tax Treatment of Crypto Assets, etc. | National Tax Agency

Based on this, crypto assets are positioned as property that holds value in the same way as money. When the owner passes away, they are included in the inherited estate just like cash, securities, or real estate.

In addition, under the Civil Code, a decedent's property is inherited comprehensively, and no specific asset is excluded on its own. Following this principle, crypto assets are no exception and become subject to inheritance by the heirs.

How to Inherit Crypto Assets | Procedural Flow

When the owner of crypto assets passes away, those assets become part of the estate and are inherited by the heirs. However, crypto assets do not have an automatic transfer mechanism like a bank account. With a bank, once the death is confirmed, the account is frozen, and after the inheritance procedures are completed, funds are paid out. Crypto assets have no equivalent mechanism, so the heirs themselves must take action.

Specifically, if the crypto assets are held at an exchange (order-book marketplace), it may be possible to withdraw them by completing the prescribed inheritance procedures. On the other hand, for crypto assets managed in a wallet, the outcome depends heavily on whether the heir knows the access information, such as the recovery phrase or private key.

If this information is unknown, even an heir may be unable to access the assets. In other words, while crypto assets are subject to inheritance, whether they can actually be passed on depends greatly on how they were managed — an important point to keep in mind.

Inheritance Procedures for Crypto Assets Held at an Exchange

Crypto assets deposited at an exchange can be passed on to heirs by completing the exchange's designated inheritance procedures. As with a bank account, the heir applies to the exchange and proceeds through the required steps, after which the assets are transferred or paid out.

Exchange inheritance procedures typically proceed through several steps. The general flow is as follows:

1. Notify the exchange that inheritance has occurred
2. Prepare the required documents (family register, estate division agreement, etc.)
3. Submit the documents and have their contents verified
4. The assets are transferred to the heir's account, or a payout is made

These procedures require documents proving the relationship between the decedent and the heir, as well as documents indicating who is to receive the assets. In particular, the required documents vary depending on whether a will exists and how the estate has been divided, so checking in advance is important.

Also, if crypto assets are involved, heirs who do not already hold an account at the same exchange may be asked to open a new one in order to receive the transferred assets. This is because, from the standpoint of preventing fraud and verifying identity, the exchange needs to confirm the heir's identity.

Note that the specific procedures and required documents differ from exchange to exchange. Below are the inheritance procedure pages for some major domestic exchanges.

• bitbank
• bitFlyer
• Coincheck
• GMO Coin

How to Pass On Crypto Assets Held in a Wallet

Crypto assets managed in a wallet are not passed on through an exchange-style inheritance procedure; instead, they are inherited by restoring the wallet using its access information. What is required for this restoration is information such as the recovery phrase or private key.

These are issued when the wallet is created and are the only means of accessing the assets. Whether the heir has this information therefore largely determines whether inheritance is possible. Specifically, when an heir enters the recovery phrase into a wallet app, the same address as the original wallet is regenerated, allowing access to the assets.

Note that if the recovery phrase or private key is unknown, even an heir may become unable to access the assets. While the wallet transfer process itself is simple, it is important to remember that it depends entirely on having the necessary information on hand.

Cases Where Crypto Assets Cannot Be Inherited

Crypto assets are property subject to inheritance, but there are cases in which they cannot actually be inherited. This is because, unlike a bank account managed by an administrator, access to the assets is managed by the individual.

Accessing crypto assets requires information such as the recovery phrase or private key. If this information cannot be confirmed, even an heir may be unable to touch the assets.

Specifically, the following types of cases apply:

• The recovery phrase or private key is unknown, and the wallet cannot be restored.
• It is unclear which wallet was used, making it impossible to determine how to restore it.
• Even after restoring the wallet, no assets appear, making it impossible to confirm whether access was successful.

In such situations, the crypto assets exist but effectively cannot be withdrawn. In other words, while crypto assets are subject to inheritance, whether they can actually be passed on depends greatly on how they were managed — an important point to keep in mind.

Inheritance Tax on Crypto Assets

When crypto assets are inherited, they become subject to inheritance tax.

When crypto assets are acquired from a decedent through inheritance, bequest, or gift, inheritance tax or gift tax is levied.

Reference: Tax Treatment of Crypto Assets, etc. | National Tax Agency

For crypto asset inheritance, it is not simply a matter of "inheritance tax applies" — there are points to be aware of depending on the valuation method and subsequent handling. In particular, it is important to understand in advance at what point in time the assets are valued, and what taxes arise after inheritance.

Let's look at these specific mechanisms below.

Inheritance Tax Rates

Inheritance tax is not levied unconditionally on all property, including crypto assets. A "basic exemption" is set, below which no inheritance tax is due.

The basic exemption is calculated using the formula "¥30 million + ¥6 million × number of statutory heirs." For example, if there are three statutory heirs — a spouse and two children — the calculation is "¥30 million + (¥6 million × 3) = ¥48 million," and no inheritance tax is due up to that amount.

Inheritance tax is levied on the portion exceeding this basic exemption. However, the tax amount is not simply calculated by multiplying the acquired amount by a tax rate. The NTA explains this point as follows:

The method for calculating the amount of inheritance tax is not one in which the tax rate is applied directly to the property that each person actually acquires through inheritance, etc.

Reference: Inheritance Tax Rates | National Tax Agency

In practice, the total taxable estate is apportioned according to each heir's statutory share, and the tax rate is applied to each portion. The rate rises in stages according to the acquired amount, as set out below.

For example, if there is one statutory heir and the inherited estate is worth ¥46 million, the basic exemption of ¥36 million is subtracted, leaving ¥10 million subject to tax, to which a 10% rate is applied.

In this way, inheritance tax is applied on a progressive basis to the portion exceeding the basic exemption. Keep in mind that the actual tax burden changes depending on the total value of the inherited property and the number of heirs.

Valued at the Price on the Date of Inheritance

Inheritance tax on crypto assets is assessed based on the price at the time the decedent passed away. It is important to note that the valuation is based on "the market value at the time of death," not the purchase price or the price after inheritance.

Crypto assets with an active market are valued based on the transaction price at the time of taxation, as published by the crypto asset exchange service provider through which the taxpayer, such as the heir, conducts transactions.

Reference: Tax Treatment of Crypto Assets, etc. | National Tax Agency

Here, "time of taxation" refers to the point at which the decedent passed away. In other words, the valuation used to calculate inheritance tax is based on the exchange price at that point in time.

For example, suppose 1 BTC was purchased for ¥3 million, and by the time of death its price had risen to ¥10 million. In this case, the inheritance tax calculation uses ¥10 million as the valuation — not the ¥7 million difference from the original ¥3 million purchase price. This is because inheritance tax is levied on "the value of the property at the time of inheritance," not on "gains."

In this way, because inheritance tax on crypto assets is determined by "the market value at the time of death" rather than the acquisition price, it is particularly sensitive to price fluctuations — a point worth keeping in mind.

Selling Later Triggers a Separate Tax

When crypto assets are sold after being inherited, the tax mechanics require attention. Heirs may consider selling because cash is easier to handle, but without understanding the mechanism, the tax burden can end up larger than expected.

Crypto assets only become subject to income tax and resident tax at the point they are sold. The gain on sale is calculated by subtracting the acquisition cost from the sale price, and tax is levied on that difference. Importantly, the acquisition cost used here is not reset for the heir — it carries over as the price the decedent originally paid to acquire the assets. This means that if the price has risen significantly since the original acquisition, the taxable gain also becomes larger.

For example, suppose the decedent bought 1 BTC for ¥3 million, and by the time of inheritance the price had risen to ¥10 million. If the heir then sells it for ¥10 million, the acquisition cost is still treated as ¥3 million, so the gain is calculated as "¥10 million − ¥3 million = ¥7 million."

Regarding the potential for a heavier tax burden under this mechanism, Japan's Nikkei newspaper has noted the following:

For crypto assets that have surged sharply in price, if the holder passes away and the heir sells the assets, the combined tax rate the heir faces can, in some cases, exceed 100%.

Reference: Nikkei (Nihon Keizai Shimbun)

Cases exceeding 100% are admittedly rare, but as a guide, for an inherited amount of around ¥50 million, the combined burden of inheritance tax and sale-related tax can reach roughly 30%–40%, and for amounts exceeding ¥100 million, the combined burden can potentially exceed 60%.

In this way, because crypto assets can trigger a separate tax upon sale on top of inheritance tax, the overall tax burden can become substantial depending on the circumstances. This is particularly true when the price has risen significantly since the original acquisition, making careful judgment about how to handle the assets after inheritance important.

Note on the tax framework: As of July 2026, gains from selling crypto assets are classified as "miscellaneous income" and taxed under Japan's aggregate (comprehensive) taxation system, together with other income such as salary — the same system that applies to the sale gains described above. On July 15, 2026, an amendment to the Financial Instruments and Exchange Act (FIEA) passed a plenary vote in the House of Councillors, under which crypto assets will be reclassified as financial instruments under the FIEA; a flat 20% separate self-assessment tax rate is expected to apply from the fiscal year following the amendment's enforcement (expected around January 2028). Until that change takes effect, the aggregate taxation and progressive rates described in this article remain in force. Separately, note that losses from crypto assets can currently only be offset against other miscellaneous income — they cannot be offset against salary or other income categories.

Estate Planning Steps to Take While Still Alive

Crypto assets are property subject to inheritance, but as noted, there are cases where they cannot actually be inherited, and cases where taxes significantly reduce the value passed on. For this reason, it is important to make appropriate preparations while still alive.

Taking steps in advance not only allows heirs to inherit the assets smoothly, but can also reduce the risk of unnecessary trouble and tax burden. Below, we explain the estate planning steps you should take for crypto assets while still alive.

Share the Recovery Phrase in Advance

Crypto assets managed in a wallet cannot be restored by heirs unless they know the recovery phrase. Unlike an exchange, there is no operating company managing the assets, so only the person holding the access information can access them.

For this reason, it is important to store or share the recovery phrase while still alive, in a way that heirs can access. For example, this could mean writing it down on paper and storing it in a secure location, or sharing it only with a trusted family member.

However, if a third party learns the recovery phrase, there is a risk of losing the assets at that point. Even when sharing it as part of estate planning, careful attention is needed regarding where it is stored and how it is shared.

Diversify Through Lifetime Gifts

Using lifetime gifts can reduce the risk of being taxed all at once at the time of inheritance. Rather than passing on all the assets at once upon inheritance, transferring a portion in advance allows the taxable amount to be spread out. Gift tax includes an annual tax-free allowance of up to ¥1.1 million, within which assets can be transferred without incurring a tax burden.

For crypto assets, converting them to cash before gifting makes it easier to control the amount being transferred. For example, selling and gifting up to ¥1.1 million per year allows assets to be transferred gradually within a manageable range.

However, there is a caveat to this approach. When crypto assets are sold, income tax and resident tax are levied on the resulting gain. Because this falls under the "aggregate taxation" system, in which the gain is combined with income such as salary, a higher tax rate may apply if the individual's overall income is high, potentially resulting in a larger-than-expected tax burden.

For this reason, it is important to understand the tax mechanics and proceed with a well-thought-out plan.

Conclusion

Crypto assets are property subject to inheritance, and assets held at an exchange can be passed on by completing the designated procedures. On the other hand, assets managed in a wallet cannot be accessed by heirs — even by the rightful heir — without access information such as the recovery phrase.

Tax treatment also requires attention when inheriting crypto assets. Inheritance tax is assessed based on the price at the time of death, and if the assets are later sold, income tax and resident tax are levied on the resulting gain. In particular, if the price has risen significantly since the original acquisition, the tax burden can become substantial.

In this way, while crypto assets can be inherited, depending on how they are managed and how the tax rules apply, unexpected trouble or burdens can arise. To avoid these risks, it is important to put appropriate management and estate planning in place while still alive.

This article is for informational purposes only and does not constitute financial or investment advice. Please consult a qualified professional before making investment decisions.