Japan, known for its technological advancements, embraces a tech-savvy culture. While crypto trading and investment are fully legal under the Payment Services Act, the use of cryptocurrencies as a form of payment is strictly prohibited.
On July 28, 2023, the Japan Blockchain Association (JBA), a collective of crypto companies, presented a formal request to the Japanese government seeking minor adjustments to the existing crypto laws.
The submitted request highlights three key points:
- Elimination of year-end unrealized earnings taxation for cryptocurrencies issued by third parties.
- Transitioning the method of taxation for personal transactions to a simplified flat tax rate of 20%.
- Abolition of income tax on profits generated from the exchange or transfer of crypto assets.
The submitted request emphasizes that implementing changes to address the aforementioned issues would greatly benefit both crypto investors and companies, allowing them to actively engage in the Web3 economy with greater ease.
Additionally, the Japan Blockchain Association (JBA) highlights that these proposed changes would not only increase tax revenue for the Japanese government, but also showcase the country’s strong global position in the pursuit of Web3 adoption.
According to the JBA, the existing crypto tax regulations are deemed unfair and burdensome for participants within the crypto sector.
Japan, Crypto, & rules
Undoubtedly, certain crypto-related regulations in Japan may be complex, but it is also worth noting that crypto companies have the freedom to conduct their business operations within the country’s well-defined rules and regulations.
In July of this year, Circle, a Stablecoin firm, announced its plans to introduce a stablecoin specifically tailored for the Japanese crypto market, taking advantage of the recent revisions made to the country’s existing laws.
It is worth noting that the Japanese government has implemented new changes to its crypto regulations in order to address any potential vulnerabilities present in the existing rules. As a result of these updates, certain crypto companies found it challenging to meet the revised requirements and subsequently made the decision to withdraw from the Japanese jurisdiction.