Japan FSA Reviews Crypto Regulations and Tax Cuts

The Financial Services Agency (FSA) of Japan is set to reassess its cryptocurrency regulations, potentially reducing taxes on crypto gains and reclassifying digital assets.

Bloomberg News reported that the agency’s review will continue through winter. It will examine whether the Payments Act framework remains suitable given cryptocurrencies’ evolving role.

According to the report, the FSA is considering shifting digital assets under the Financial Instruments and Exchange Act, which could result in stricter investment rules. The move may also reduce the current tax rate on crypto gains, which can reach as high as 55%. If the assets are reclassified, they could be taxed at approximately 20%, similar to stocks and other financial instruments.

Local industry representatives have long claimed that high taxes on crypto gains hinder growth. They argue that lowering the tax burden would encourage further investment in the sector. According to the same Bloomberg report, alongside tax reforms, the FSA’s review may also approve exchange-traded funds (ETFs) that include digital tokens.

The FSA has sought to balance innovation in the cryptocurrency space with investor protection. In 2022, the agency required crypto exchanges to obtain licenses, leading to interest from major firms like Bitget and Bybit. The ongoing regulatory review reflects Japan’s efforts to support the growth of its digital asset sector.

This review is said to be taking place amidst potential political changes, with Liberal Democratic Party president Shigeru Ishiba replacing Prime Minister Fumio Kishida. Kishida has supported Web3 and blockchain technologies, and his departure could influence future regulatory developments.

Trading volumes in Japan’s cryptocurrency market have risen, with data from CCData showing that volumes reached nearly $10 billion monthly in 2024, up from $6.2 billion in 2023. A surge in Bitcoin and other cryptocurrencies has largely driven the increase.

Lawrence does not hold any crypto asset. This article is provided for informational purposes only and should not be construed as financial advice. The Shib Magazine and The Shib Daily are the official media and publications of the Shiba Inu cryptocurrency project. Readers are encouraged to conduct their own research and consult with a qualified financial adviser before making any investment decisions.

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