The crypto lobbyists in Japan have called upon the Financial Services Agency (FSA) in the country to relax the taxes that had been imposed on the local digital asset market.
According to the most powerful crypto lobbying organizations in Japan, the high tax rates on crypto assets are stifling business growth. They are advocating for lower taxes to retain talent in the country.
Doing so would mean that professionals would stay in their home country, rather than looking for work in countries that have better tax laws.
If tax regulations are adjusted, digital asset companies would be able to enjoy a better business climate in Japan. According to lobbyists, the high tax rates of 30 to 35% make it almost impossible for blockchain businesses and investors to make profits.
Urging the FSA
The self-regulatory organization in Japan that monitors crypto listings is called the Japan Virtual and Cryptoassets Exchange Association (JVCEA).
A platform by the name of Japan Cryptoasset Business Association (JCBA) enables networking between BTC-linked businesses and addresses problems in the country’s crypto space.
Both of these organizations are gearing up to send a letter to the FSA to urge it to reduce the tax requirements on crypto assets.
The unrealized earnings of crypto firms are currently taxed at a rate of 30% to 35%, but the two organizations claim that this is making things difficult for the companies.
They also stated that such high taxes are also discouraging other entrepreneurs from launching their operations in Japan.
The JVCEA and the JCBA are collaborating together in order to lower the entry barrier in the country. They are working on a plan aimed at helping people in trading and storing crypto.
In addition, it is also targeted toward crypto businesses that want to introduce new cryptocurrencies in the region.
The two organizations plan on asking the FSA to only tax unrealized earnings on crypto if they are not held for short-term trading.
They are likely to submit the proposal to the FSA by the end of the week. The organizations also want the government to cut down the tax on crypto businesses to 20%.
It should be noted that Japan had been the first country to have developed a regulatory framework to oversee the crypto market.
Cryptocurrencies had been declared legal tender in the country as early as April 2017. However, crypto regulations were changed by the Japanese watchdog, the FSA, in 2019.
This was after the notorious Coincheck breach that had occurred, which had been one of the biggest hacks at that time.
This was because it saw almost $500 million worth of cryptocurrencies stolen. Since then, Japan’s regulations were adjusted and all crypto exchanges are required to comply with counter-terrorism financing (CFT) and anti-money laundering (AML) policies.
Other than Japan, there are more countries that are also working on crypto regulations, as the market appears to be expanding and the risks associated with them have also become apparent.