Lower Taxes, Says Japan’s Crypto Lobby Group

The most influential cryptocurrency lobbying organizations in Japan claim that the current tax rates restrict sector expansion and call for tax reductions to prevent the exodus of skilled workers.

The Japan Virtual and Crypto Assets Exchange Association (JVCEA) and the Japan Cryptoasset Business Association (JCBA), two of Japan’s most powerful lobbying organizations, were recently rumored to be working on a plan to bring to the country’s Financial Services Agency (FSA) this week.

Politicians from a range of parties have also expressed concerns akin to this. One of the politicians who has spoken out most against this subject is Masaaki Taira, a member of the Liberal Democratic Party, the current ruling party. He has been pursuing this objective while pleading with his colleagues to loosen the regulations in order to “stop the loss of digital talent.”
A change in the tax rates

In order to make holding and issuing cryptocurrencies more affordable, the proposal will propose revisions to the current tax code.

Currently, Japan taxes any profits derived from cryptocurrency investments.

Whether or not the profit has been achieved, businesses pay a rate of thirty percent, while individual investors pay up to fifty-five percent.

As part of the proposal, these percentages will be decreased. It will suggest that profits from cryptocurrency sales be excluded from taxation, provided that the profits were not attained through corporate short-term positions. On the other hand, it will advocate a predetermined rate of 20% for those who make investments on their own behalf.

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According to a recent report, the Financial Stability Authority (FSA) is apparently considering lowering crypto taxes in light of the fact that certain MPs have brought up the same concerns. Although there have been discussions about reducing tax rates, the watchdog hasn’t determined whether or not to include this change in its annual review. The annual adjustment must be submitted to the appropriate tax authorities by the end of August. By then, it is anticipated that the plan will have been delivered by the JCBA and JVCEA.
Japanese cryptocurrency regulations

Japan was the first nation to propose that a legal framework be put in place to regulate cryptocurrencies.

Japan first recognized some cryptocurrencies as a legitimate form of money in April 2017.

In reaction to the Coincheck hack that happened in 2018, Japan’s financial authority, the FSA, tightened the rules for cryptocurrency exchanges in 2019. At the time, the hack was one of the biggest, and the thieves made off with about $500 million worth of cryptocurrencies.

Since then, all bitcoin exchange companies have had to follow the nation’s anti-money laundering (AML) and countering financial terrorism (CFT) laws.

Japan has stated repeatedly that more limitations and regulations will be placed on the bitcoin sector after the 2019 update. The county government began an initiative to limit the DeFi’s activities in 2021. After the LUNA stablecoin failed, Japan passed legislation that only allowed licensed financial institutions to issue stablecoins.

Due to the country’s high taxes and onerous regulations, some bitcoin startups have already departed Japan.

The majority made their home in Singapore, which was the closest and friendliest country to them.

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In a recent interview, Sota Watanabe, the CEO of Stake Technologies, who also moved his business to Singapore, stated:

“Nearly impossible to run a profitable business in Japan.

Japan hasn’t even crossed the starting line of the competition, despite the fact that the battle for Web 3.0 hegemony has already started on a global scale.

The FSA is of the opinion that Japan’s crypto industry can self-regulate despite the strict laws. By forming the JVCEA, the nation came up with the notion to self-regulate the cryptocurrency industry in 2018. The FSA, however, recently expressed its displeasure with the self-regulation mechanism by saying:

“Many people around the world predicted that Japan’s decision to experiment with self-regulation of the cryptocurrency industry would fail, and as a result, Japan was heavily criticized. Unfortunately, from what we can determine so far, it seems like they might be right.