Taro Aso, the Japanese finance minister, recently expressed opposition to cutting down crypto income tax to 20%. If cut, it would have reduced crypto taxation to the same level as stock dividends. He claimed that most households in Japan found it difficult to invest in the crypto sector.
No Change to Crypto Taxation
The comments by the Finance Minister suggest that Japan will continue taxing the crypto sector as miscellaneous income, which attracts a tax of up to 55%. Players in the crypto industry of Japan have been calling for changes to the law that would see crypto categorized as stocks and taxed the same way.
According to a recent tweet, the finance minister said that of the $17.6 billion in financial assets owned by Japanese households, about $8.4 billion was in cash deposits. He added that this was an abnormal situation. He added that it would be difficult to convince Japanese households to convert their cash savings into digital assets.
The finance minister also discusses the legal definition of digital currencies in Japan. He noted that since the passing of the Payment Services Act, the term “crypto-asset” had replaced all other terms used to define virtual currency in Japan. The law passed in May after a delay in the issuance of the official notice by one month. During the hearing, the finance minister also suggested having the word “crypto-asset” replaced with “Ango Shishan” which means “stablecoin” in Japanese. The minister believes that the word “crypto” sounds a bit shady and it would be better to replace it with one that sounds more stable.
Besides the name change, the new law also lowered the leverage cap allowed for crypto margin trading from 4X to 2X. When the FSA was asked why it lowered the cap, it said that the decision was made after consultations with experts. The agency added that the cut was appropriate given how volatile crypto trading was.
Japan and the Crypto Sector
Japan has decided to regulate the crypto sector instead of banning it. However, high taxation means that it will discourage many people from being willing participants in the industry. Despite the high level of taxes, crypto is still quite popular in the nation.
Various countries around the world that planned to ban crypto trading have dropped those plans in favor of taxing the sector. Besides that, they have given legal recognition to crypto assets. It means that people can seek legal redress if their crypto assets are stolen. No doubt, it will help unlock investments into the sector as more countries give the sector legal backing
While the law is very strict when it comes to crypto trading, the country could soon launch a national digital currency. The decision was arrived at in reaction to China’s planned launch of digital currency. China is the largest economy in SE Asia and having a digital currency will no doubt make using its national currency much easier. As a result, Japan could be hoping to avoid receiving competition for its Yuan at home by coming up with a national digital currency.
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