Japan’s financial regulator is preparing to revise cryptocurrency regulations, which could potentially lower crypto taxes and pave the way for a digital asset exchange-traded fund (ETF).
Crypto Review in Japan Need of the Hour
Speaking to Bloomberg on condition of anonymity, an official from Japan’s Financial Services Agency (FSA) said that in the coming months, the agency will conduct a comprehensive review of existing crypto regulations.
The main focus of the review will be to determine whether the current approach to regulating digital assets under the Payments Act is adequate.
In particular, the FSA will assess whether the act provides adequate protection for investors. The source added that digital assets are primarily used for investment and speculation rather than as a means of exchange.
One possible option is to classify tokens as financial instruments under Japanese investment law. Commenting on this development, Yuya Hasegawa, market analyst for crypto exchange bitbank Inc., said:
Reorganizing digital assets through the Financial Instruments and Exchange Act will strengthen investor protection and introduce other dramatic changes.
Referring to these “dramatic changes,” Hasegawa added that such a regulatory change would reduce the tax rate on crypto profits from 55% to 20% – aligning them with taxes on assets such as stocks and other similar financial instruments.
Additionally, this restructuring may clear the way for the introduction of token-based ETFs, further integrating digital assets into Japan’s financial economy.
Japan Determined to Regulate Crypto Despite Previous Challenges
Japan’s cautious approach to regulating digital currencies is not surprising, given its history that includes Mt. Gox, a now-defunct Tokyo-based crypto exchange. hacked in 2014. In May 2024, Japanese exchange DMM Bitcoin he fell victim of a similar hack, lost $305 million worth of digital assets.
Despite these problems, the Japanese regulator still has it done has been very clear over the years that it does not intend to “extremely” regulate cryptocurrencies – a very different approach from China’s strict crypto laws.
A recent survey found that many institutional investors in Japan are ready to enter the digital asset space within the next three years. However, crypto executives see more room for stricter regulations that could help reduce operating costs and boost growth.
Earlier this year, the Japanese government done a policy change that allows venture capital and other investment companies to hold digital assets directly.
Crypto trading in Japan is witnessing a resurgence after a long period of decline since 2022. The average monthly volume in August 2024 in the middle exchange of Japan reached about $ 10 billion, compared to $ 6.2 billion in 2023.
Recently, Japanese publicly traded company Metaplanet Inc. made headlines when it did so revealed that it has added Bitcoin (BTC) to its balance sheet. BTC is trading at $62,761 at press time, down 2.1% in the last 24 hours.
Featured image from Unsplash.com, Charts from Bloomberg.com and TradingView.com