Japan May Cut Cryptocurrency Profit Tax: Regulatory Review
Date: 2024-10-01 Author: Gabriel Deangelo Categories: IN WORLD
The Financial Services Agency of Japan (FSA) is planning to review its current cryptocurrency regulations to create a more favorable environment for investors by 2025. As Bloomberg News reported on September 25, the review is expected to consider changes to the tax regime and a reassessment of the role of digital assets.
Regulatory Reform
Possible changes could affect the classification of digital assets, which could be included in the Financial Instruments and Exchange Act. This would allow for tighter control over investments, but could also reduce the tax burden on cryptocurrency profits. Currently, the tax on cryptocurrency profits in Japan can reach 55%. However, if digital assets are revalued as financial instruments, the tax could be reduced to 20%, which is in line with the rate for stocks and other financial assets.
Local cryptocurrency industry representatives have long said that high taxes are holding back the market’s growth. They believe that reducing the tax burden could attract new investors and stimulate the development of the sector.
Possible innovations
In addition to revising the tax policy, the FSA may also consider approving exchange-traded funds (ETFs) that contain digital tokens. This would allow cryptocurrencies to become part of the wider Japanese financial market. Over the years, the FSA has sought to find a balance between supporting innovation in digital assets and protecting the interests of investors. The new revision indicates a continued effort to find this balance.
Balancing innovation and protection
In recent years, Japan has been actively developing the digital asset sector. Many companies are exploring the opportunities offered by blockchain technology and stablecoins. In 2022, the country passed a reform requiring cryptocurrency exchanges to obtain licenses, which attracted the interest of major players such as Bitget and Bybit.
Future cryptocurrency policy may depend on a possible change in the country's leadership. If Prime Minister Fumio Kishida hands over power to Shigeru Ishiba, the direction of cryptocurrency regulation may change, as Kishida supports Web3 and blockchain technologies.
Japan has also recently taken steps to support its local blockchain ecosystem by allowing investment funds to invest in cryptocurrencies. Despite the uncertainty, the country’s digital asset market continues to grow. In 2024, monthly trading volumes reached nearly $10 billion, significantly higher than last year.
