[NEWS] Financial Services Agency to review cryptocurrency regulations; may accelerate discussions on tax reform and ETF approval

It has been learned that the Financial Services Agency (FSA) plans to review regulations regarding crypto assets (virtual currencies). Bloomberg reported on the 30th of last month, citing anonymous sources.

Discussions will be held over the next few months on whether it is appropriate to regulate crypto assets within the current framework of the Payment Services Act.

Currently, many people trade crypto assets for investment purposes. In light of this situation, if it is determined that investor protection is insufficient under the current regulations, discussions will be held with the possibility of making them subject to the Financial Instruments and Exchange Act (FIEA).

If crypto assets are subject to the FIEA, it will be more likely that they will be considered financial assets, so it is expected that discussions on tax reform will also accelerate.

There is also a possibility that discussions will become more active towards realizing a cryptocurrency ETF in Japan, led by a Bitcoin spot ETF in the United States.

FSA officials refrained from commenting on the impact of making crypto assets subject to the FIEA. The review of crypto asset-related regulations will continue until winter.

Tax reform is a long-cherished wish of the industry

Tax reform is a long-cherished wish of the crypto asset industry.

Industry groups have been making recommendations to the government regarding the tax reform of crypto assets. As a result, the crypto-related tax system for companies has been revised for two consecutive years.

In the crypto-asset tax system, there is a strong demand for reform, especially for individual trading profits.

Currently, profits from crypto-asset trading are treated as miscellaneous income, and the maximum tax rate, including resident tax, is 55%.

These tax burdens are said to be hindering the spread of crypto-assets in Japan, and there have been calls from both inside and outside the industry for the introduction of a 20% separate self-assessment tax, similar to that for stock investments.

Although making crypto-assets subject to the Financial Instruments and Exchange Act is not necessarily a shortcut to reforming the crypto-assets tax system, it has the potential to accelerate the discussion.

Reference: Bloomberg
Image: Shutterstock

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