- The review will evaluate if the Payments Act has been effective.
- Digital asset taxes could be lowered to as much as 20%.
Japan is reportedly interested in reviewing its cryptocurrency rules in the coming months. The rule change could introduce lower digital asset taxes and channel domestic funds to crypto tokens.
The changes to be made by the Financial Services Agency will evaluate whether Japan’s approach to regulating the crypto sector under the Payment Act is effective. Particular focus will be made on whether the act offers adequate investor protection since tokens are mostly used for investment instead of payments. This could see the reclassification of digital assets under the nation’s investment law.
The projected changes could see Japan levy gains on digital assets at 20%, a significant cut from the present 55%. The amendment will bring the taxation regime in line with that of other assets, such as stocks.
See Related: Japan Lifts Stablecoin Ban, Bright Futures For Crypto In Asia
Dramatic Changes Expected But Not Outright
BitBank Inc. market analyst Yuya Hasegawa says reclassifying digital assets under the Financial Instruments and Exchange Act will enhance investor safeguards. Hasegawa also expects “dramatic changes,” including scrapping the ban on exchange-traded funds.
An FSA official, who asked not to be mentioned, says there are still no foregone conclusions, including whether the reclassification would occur. The official also says the projected review may last through the winter.
If the crypto rule changes happen, Japan will have taken a big leap from its digital asset regulations, which have been considered too strict. The strict regime comes from previous crypto scandal learnings, including the 2014 hack of the now-defunct Tokyo-based crypto exchange Mt.Gox. However, Japan’s PM Fumio Kishida has been vocal in pushing for innovations built around Web 3.0 and blockchain.
