The Japan Blockchain Association (JBA) has made a request to Prime Minister Fumio Kishida to modify the country’s tax system concerning cryptocurrencies. The association has proposed three key changes aimed at fostering the growth of the crypto industry and increasing accessibility to individual investors.
Firstly, the JBA suggests eliminating year-end unrealized gains taxation on tokens issued by third parties. Secondly, they recommend introducing separate taxation for individual crypto asset transactions with a consistent tax rate of 20%. Lastly, the JBA proposes doing away with income tax on earnings from crypto asset exchanges.
The adoption of these reforms, according to the JBA’s assessment, would create a favorable business environment for web3 ventures and make crypto asset ownership and usage simpler for the general public.
This move by the JBA aligns with the growing interest from global crypto firms. For example, Binance, the world’s largest crypto exchange, has shown interest in expanding its operations in Japan.
Overall, the Japanese government has been quite receptive to crypto and blockchain innovations. They have taken measures such as establishing a dedicated unit for crypto regulation, implementing lenient guidelines for crypto exchanges, and showing support for blockchain development, indicating their increasing openness to these technologies.
Consequently, the JBA’s proposal for tax reforms further reinforces this trend, potentially making Japan an appealing destination for crypto firms and investors.
As for Japan’s current taxation of crypto assets, the country treats them as assets for tax purposes, subjecting any profits or losses from crypto asset sales or exchanges to capital gains tax. In contrast, the United States views Bitcoin as a commodity and taxes capital gains on it.
The Securities and Exchange Commission (SEC) in the United States has identified certain assets like Cardano (ADA) as examples of unregistered securities in lawsuits against Coinbase and Binance. However, both platforms have denied these allegations.
In Europe, the European Parliament has approved the Markets in Crypto-Assets (MiCA) regulation in H1 2023, which is set to take effect in 2024. MiCA aims to establish a comprehensive regulatory framework for crypto assets within the EU.