Earlier this year, at Hong Kong's Bitcoin Asia, there was a growing sense of frustration with Digital Asset Treasury (DAT) companies and their lagging performance against the asset they fill their coffers with.

“Just buy an ETF,” is how Strive Asset Management CEO Matt Cole put it on stage during a panel at the conference.

But in Japan, this isn't the case. Indeed, DATs listed in Tokyo consistently outperform bitcoin because of the local tax treatment of equities vs. crypto.

Those premiums are not random. They are an expression of Japan’s tax incentives, which punish direct crypto gains but reward equity gains with lower rates and loss offsets.

Crypto profits in Japan are treated as miscellaneous income, lumped with salary and other earnings, and taxed at progressive rates that can reach 55% for the highest earnings.

These gains cannot be offset with losses from other sources and cannot be carried forward. Equity profits sit in an entirely different category. They are taxed separately at about 20%, with loss carryforwards allowed and with far simpler reporting requirements. The difference creates a clear financial incentive: holding bitcoin directly risks a high tax bill, while holding a bitcoin-linked stock keeps any gains inside the lower-tax equity bucket.

Investors who want Bitcoin exposure without the 55% tax bill have little choice but to bid up the shares of companies that hold BTC. American firms operate in a neutral tax environment, so their stocks rarely trade far above their BTC holdings.

At the same time, the Tokyo Stock Exchange and Japan Exchange Group are growing increasingly uneasy with the volatility their own tax regime helped fuel, CoinDesk previously reported, as they have begun warning companies about backdoor listing tactics, tightening audits, and signaling that the DAT model may expose retail investors to risks they do not fully understand.

Similar conversations are happening elsewhere in Asia, with regulators in Hong Kong, India, and Australia reportedly concerned about the structure and are discouraging listed companies from going through with the strategy.

Back in Japan, DAT's might soon be losing their luster as the country's tax authority mulls a change to the tax treatment of crypto.

If this happens, without the tax edge, Tokyo-listed DATs will quickly lose their luster. “Just buy an ETF” may end up being the advice that works in Japan too.