Japan’s financial regulator is preparing to review cryptocurrency regulations, which could lead to lower taxes on cryptocurrencies and pave the way for a digital asset exchange-traded fund (ETF).
Cryptocurrency review in Japan is the need of the hour
to talk Speaking to Bloomberg on condition of anonymity, an official at Japan’s Financial Services Agency (FSA) said that in the coming months, the agency will conduct a comprehensive review of current cryptocurrency regulations.
The primary focus of the review will be to determine whether the current method of regulating digital assets under the Payments Act is adequate.
Specifically, the FSA will assess whether the law provides adequate investor protection. The source added that digital assets are primarily used for investment and speculation and not as a means of exchange.
One possible option is to reclassify tokens as financial instruments under Japan’s investment law. Commenting on this development, Yuya Hasegawa, market analyst at cryptocurrency exchange bitbank Inc., said:
The reclassification of digital assets through the Financial Instruments and Exchanges Act would enhance investor safeguards and lead to other radical changes.
Referring to these “radical changes,” Hasegawa added that such a regulatory shift could reduce tax rates on crypto gains from 55% to 20% — bringing them in line with taxes on assets such as stocks and other similar financial instruments.
Additionally, this reclassification could pave the way for the launch of token-based ETFs, further integrating digital assets into Japan’s financial economy.
Japan is keen to regulate cryptocurrencies despite past challenges
Japan’s cautious approach to regulating cryptocurrencies is not surprising, given its history with Mt Gox, a now-defunct Tokyo-based cryptocurrency exchange. hacked In 2014. In May 2024, the Japanese exchange DMM Bitcoin was released He falls Victim of a similar hack, which resulted in the loss of $305 million worth of digital assets.
Despite these unfortunate incidents, the Japanese regulatory body did just that to make It has become abundantly clear over the years that it has no intention of regulating cryptocurrencies “overly” – an approach that stands in stark contrast to the strict cryptocurrency laws in neighboring China.
Recent poll Found Most institutional investors in Japan are ready to venture into digital assets within the next three years. However, cryptocurrency executives see more scope for less stringent regulations that would help reduce operating costs and boost growth.
Earlier this year, the Japanese government announced outlet A policy change allows venture capital and other investment firms to hold digital assets directly.
Cryptocurrency trading in Japan is seeing a rebound after a long decline since 2022. Average monthly volume through August 2024 on Japanese central exchanges jumped to nearly $10 billion, compared to $6.2 billion in 2023.
Recently, Metaplanet Inc. The publicly traded Japanese company made headlines when it did so It has been detected It added Bitcoin (BTC) to its balance sheet. BTC is trading at $62,761 at press time, down 2.1% over the past 24 hours.
Featured image from Unsplash.com, charts from Bloomberg.com and TradingView.com