Converting foreign-currency trades into yen
- Author
- CRYPTO PORT Editorial
- Published
- Updated
- Reading time
- 6 min
In short
If you traded in US dollars or a dollar-denominated stablecoin on an overseas venue, the return needs yen. Decide which exchange rate and which moment you use, apply that consistently through the year, and record the basis. Parts of this are set by the rules, so check the National Tax Agency's guidance and a tax accountant.
Key points
- Foreign-currency activity has to be converted into yen before totalling
- Fix which rate and which moment you use, and apply it consistently
- Stablecoin-denominated trades raise the same conversion problem
- Where conversion is two-step (coin to foreign currency to yen), record both steps
Definition
Converting the amounts of crypto transactions denominated in a foreign currency or a stablecoin into yen for the purposes of a Japanese return.
On overseas venues, almost nothing is denominated in yen. Prices appear in US dollars, or trades are recorded as swaps against a stablecoin. A Japanese return is filed in yen, so these amounts have to be converted at some point.
The conversion is often two-step. Swapping a crypto asset for a dollar stablecoin first fixes that asset's value in the stablecoin, and then the stablecoin has to be expressed in yen. Unless you record the price and rate used at each step, and the moment they refer to, the figures cannot be reproduced later. 'It is a stablecoin, so no yen conversion is needed' is not correct.
As for the exchange rate itself, there is a question of which rate and which moment — the rate on the date of the transaction, a rate published by a financial institution, and which of the telegraphic transfer selling, buying or middle rates. The rules address this, and this site will not issue instructions. Read the National Tax Agency's guidance and confirm with a tax accountant which applies in your case.
Practically, save the source of your rates. Sites that publish exchange rates withdraw historical data and change their formats. Downloading or saving the page at the time you use it makes later explanation straightforward. Where there are many transactions, keeping a single file of daily rates serves both the calculation and the explanation.
Note also that a stablecoin does not always hold exactly its intended value; its traded price can drift from what the issuer targets. Whether to reflect that precisely or to take a simpler approach is a judgement call. Do not settle it alone — agree the policy with a tax accountant, and once settled, apply it consistently through the year.
Watch out for
- · This page is a general orientation, not tax advice
- · Being denominated in a stablecoin does not remove the need to convert into yen
- · Which exchange rate applies is addressed by the rules — check the tax agency and a professional
Frequently asked questions
Do overseas trades avoid reporting because they never touched yen?
No. For a Japanese resident, income is in principle reportable regardless of where or in what unit the trading happened. The conversion into yen is extra work, not an exemption. See tax-overseas-exchange as well, and consult a tax accountant.