Lawmakers in Japan are looking into bills which could have a significant impact on the cryptocurrency industry in Japan. Japenese lawmaker Tekeshi Fujimaki who is a representative of the political party Nippon Ishin has recommended four amendments to help promote the wider spread of virtual currency into society. The four proposals are as follows:
1. A separate tax rate of 20% for cryptocurrency gains instead of the current maximum of 55%. THis would bring cryptocurrency investing more in line with the way stock and mutual funds are treated and taxed.
2. Make it possible to carry forward losses on cryptocurrency trading to make the system fairer. That is actually a really powerful rule if passed and will make cryptocurrencies more similar to traditional investments.
3. Remove the tax on trading between cryptocurrencies: Currently, for example, if you trade bitcoin for ethereum and make a profit on that you need to pay tax. His proposal would remove the tax meaning that you only pay when cashing out fiat. This would be a massive boom to cryptocurrency investors in Japan and to the whole trading industry as a whole.
4. Removing tax on making small payments in cryptocurrencies: This would be particularly important when you pay using cryptocurrencies for daily life activities such as paying for lunch at a restaurant. This would be massive in terms of adoption and encouraging people to spend their cryptocurrencies. Currently, in Japan, you need to pay taxes twice when you make a purchase using cryptocurrency, once for the crypto tax and again for the sales tax.
This is the second time that Fuji has proposed crypto friendly in the parliament of Japan. Previously his proposal was casually disregarded but let’s hope that this time it is not disregarded that casually. But until we see a signed bill passed into law this is just a proposal and until we see these changes actually happening cryptocurrency enthusiasts in Japan will continue to suffer under an unfair tax regime.
Japan ICO Regulation
The Financial Services Agency of Japan is set to launch updated regulations on the Initial Coin Offering market. The FSA has been holding ICO study groups to access the best ways to handle ICO regulation citing the need to catch fraudulent offerings. The FSA instead of creating completely new rules is looking to widen the application of two existing laws. The first law is the payment services act and the second is called the financial instruments and exchange act.
The financial instruments and exchange act, in particular, provides a regulatory framework for securities and for securities companies in Japan. The new scope of the regulations would include the need for things like disclosure, financial health screening of ICOs being offered and the regulation of distribution channels for tokens as well as possibly limiting the amount of money that investors can commit to any given ICO. Anyone wanting to hold an ICO in Japan would also to be registered with the FSA. Essentially, the FSA wants to let ICOs happen but in a way which helps investors to better understand the trueness of an ICO without causing too much trouble for the ICO itself. But this may end up impacting the number of ICOs in Japan which are being launched and potentially limit the ability for investors in Japan to participate in a wider range of foreign ICOs.
This appears to be the direction that the FSA is heading towards but it still needs to get approval from the parliament and is likely going to be subject to at least some form of provision before we see a final bill. Overall, while many do not like the idea of government regulations, this will actually be a good thing to help provide more clarity and hopefully increase the number of high quality and legitimate offerings available to investors in Japan.
It appears that lawmakers in Japan are continuing to stay at the forefront of the cryptocurrency regulation scene. If all of the rules discussed above are passed, this would be a great indicator for the future of cryptocurrency in Japan which is currently, of course, one of the crypto friendliest countries anyway.