Japan’s Financial Regulator Wants to Ease Crypto Tax Rules

Japan’s Financial Services Agency is calling for less stringent corporate tax rules for cryptocurrency assets and individual stock investors.

The proposed moves are in aid of Prime Minister Fumio Kishida’s push to revitalize Japan’s economy, Bloomberg reported Wednesday (Aug. 31).

See also: Japanese Crypto Businesses Seek Tax Cuts

The financial regulator said companies should receive exemptions from paying taxes for paper gains on crypto that they hold after issuing them, while also proposing more support for a program that offers tax breaks to individual investors.

Kishida’s plan — dubbed “New Capitalism” — promises household wealth while also supporting Japan’s Web3 sector.

Japan passed legislation in June that effectively defines stablecoins as digital currencies, making it one of the first major world economies to set up a legal framework for stablecoins.

Read more: Japan Passes Legal Framework for Stablecoins

The law says stablecoins need to be linked to a legal tender and guarantee that holders can redeem them at face value. It also says that only licensed banks, trust companies and registered money transfer agencies can issue stablecoins.

Last month, the Japan Cryptoasset Business Association and the Japan Virtual and Cryptoassets Exchange Association issued a proposal to make it cheaper for companies to issue and hold cryptocurrency tokens.

See more: Stake CEO Says Japan Should Lower Crypto Tax

Under the current system the profit from crypto holdings, unrealized gains included, incurs a corporate tax of around 30%, which can make it expensive for companies to hang on to digital coins after they’ve been issued.

These moves are happening as high taxes have driven some Japanese companies to take their operations to Singapore. Among those companies is Web3 infrastructure firm Stake Technologies, whose CEO this month also called for a reduction of crypto taxes.

“At least 20 or more” firms have left Japan due to taxes, said Sota Watanabe, who moved his company to Singapore two years ago. If Japan changes its crypto tax rules, he said he’d like to move the company back.

For all PYMNTS crypto coverage, subscribe to the daily Crypto Newsletter.