Japan’s top cryptocurrency and blockchain lobbying groups are making plans to send a proposal to the Financial Services Agency (FSA), urging it to reduce the tax requirements for crypto-focused businesses. The lobbyists argue that the current 30 to 55 percent tax rate for blockchain startups and investors makes it almost impossible for them to thrive, reports Bloomberg on July 26, 2022.
A Plea for Amenable Crypto Regulations
The Japan Cryptoasset Business Association (JCBA), a platform that allows bitcoin (BTC) linked businesses to network, and tackle issues important to the growth of Japan’s crypto space, and the Japan Virtual and Cryptoassets Exchange Association (JVCEA), the country’s self-regulatory organization that oversees cryptocurrency listings, are set to send a letter to the Financial Services Agency (FSA), urging the regulator to reduce the current tax requirements for crypto startups.
Per sources close to the matter, the Japanese government currently slaps between 30 to 55 percent tax on even the unrealized gains of cryptocurrency startups in the region. However, the JCBA and JVCEA have argued that such measures make it quite difficult for businesses to keep their digital assets once issued and it deters other startups from issuing new coins.
“Japan is an impossible place to do business. The global battle for a Web3.0 hegemony is underway, and yet, Japan isn’t even at the start line,” noted Sota Watanabe, the CEO of Web3 infrastructure company now based in Singapore.
High Taxation Stifling Crypto Adoption
Now the two crypto lobbyist groups are putting the finishing touches on a proposal that seeks to lower the barrier to entry for Japanese crypto startups looking to issue their own native altcoins, as well as regular individuals who hold or trade bitcoin (BTC) and other digital currencies in the region.
Specifically, sources say the group plans to ask the FSA to stop imposing taxes on unrealized profits on crypto holdings if the firms hold these digital assets for purposes other than short-term trading.
The JCBA and JVCEA plan to submit the proposal before the end of this week. The group also wants the government to reduce the current income tax on individual crypto investors which can reach as high as 55 percent in some cases, to 20 percent.
While Japan used to be one of the most crypto-friendly regions across the globe, the nation’s current stringent cryptocurrency regulations have triggered a serious exodus of crypto startups from Japan to countries like Singapore and Dubai which have more amenable rules.
However, both the JVCEA and the JCBA have been working hard to put the nation at the frontline of the crypto revolution. As reported by crypto.news earlier in March 2022, the JVCEA revealed plans to simplify the existing crypto listing process of bitcoin (BTC) trading venues to improve the liquidity of exchanges and make them more competitive.
It’s worth noting that Japan is not the only nation facing the risk of falling behind when it comes to crypto innovation, as India’s recent draconian crypto tax requirements have forced a lot of digital assets exchanges, blockchain businesses, and investors to leave the region.