Japan’s top crypto lobbies push for lower taxes to attract talent

Japan’s strongest crypto lobbying groups say that current tax rates prevent industry growth and call for lower taxes to prevent talent outflow.

Bloomberg News reported that two of the top lobbying groups, the Japan Cryptoasset Business Association (JCBA) and the Japan Virtual and Crypto assets Exchange Association (JVCEA), are working on a proposal to submit to Japan’s Financial Services Agency (FSA) this week.

Politicians from various parties have been raising the same concerns as well. A member of the ruling Liberal Democratic Party, Masaaki Taira, is one of the most vocal politicians on the matter. He has been expressing and pursuing his colleagues to loosen the regulations to “stem the outflow of digital talent.”

Changes in tax rates

According to an internal memo seen by Bloomberg, the proposal will offer re-adjustments to the current tax policy to make holding and issuing crypto cheaper.

Japan currently taxes all profit from crypto investments, both realized and unrealized, at a rate of 30% for corporations and up to 55% for individual investors.

The proposal will offer to lower these percentages. It’ll offer to make all gains on crypto earnings tax-free, as long as they’re not gained from short-term positions for the corporations. For individual investors, on the other hand, it’ll suggest a fixed rate of 20%.

Since certain politicians raised the same issues, the FSA has been discussing the need to lower crypto taxes as well, according to Bloomberg. Even though there are talks about reducing taxes, the watchdog didn’t decide whether to include this update in its annual revision. The annual revision is submitted to the tax authorities every August. The JVCEA and JCBA are planning to deliver the proposal by then.

Crypto regulations in Japan

Japan is the first country that implied a legal system to regulate cryptocurrencies. Japan recognized crypto assets as legal tender as early as April 2017.

Japan’s watchdog FSA strengthened the rules for crypto exchanges in 2019 after the country suffered the Coincheck hack. The hack was one of the largest at the time, where hackers stole over $500 million in crypto assets.

Since then, all crypto exchange companies must comply with the country’s anti-money laundering (AML) and combatting financial terrorism (CFT) rules.

Following the 2019 update, Japan continued to imply more rules and regulations on the crypto space. In 2021, the county established an initiative to regulate the DeFi operations. Following the LUNA stablecoin crash, Japan passed a bill that limited stablecoin issuances only to licensed banks.

High taxes and tight regulations have already pushed some crypto companies out of Japan. Most relocated to the closest and most-friendly nation, Singapore.

Stake Technologies’ CEO Sota Watanabe, who also moved his company to Singapore, told Bloomberg:

“Japan is an impossible place to do business.T he global battle for a Web 3.0 hegemony is under way, and yet, Japan isn’t even at the start line.”

Despite the tight rules, FSA thinks Japan’s crypto sphere is self-regulating. The country established JVCEA in 2018 to self-regulate the crypto industry. However, the FSA expressed its unhappiness with the self-regulation system very recently and said:

“When Japan decided to experiment with self-regulation of the cryptocurrency industry, many people around the world said it would not work. Unfortunately, right now it looks as though they may be correct.”

The post Japan’s top crypto lobbies push for lower taxes to attract talent appeared first on CryptoSlate.