[NEWS] Prime Minister Ishiba is reluctant to support cryptocurrency ETFs and the application of a 20% separate reporting tax

On the 2nd, in a representative question session following his policy speech, Prime Minister Ishiba expressed a negative stance on the application of a 20% separate self-reporting tax on cryptocurrency profits.

This was his response to a question posed by Representative Asano Tetsu of the Democratic Party for the People at a plenary session of the House of Representatives.

Representative Asano pointed out, "While the global cryptocurrency market continues to grow rapidly, in Japan, profits from cryptocurrency transactions are currently taxed at up to 55% as miscellaneous income. These regulations and tax systems are hindering the outflow of assets from Web 3.0 companies and individuals overseas." He also stated, "We need to introduce a uniform 20% separate self-reporting tax on profits from cryptocurrency transactions to promote business in the Web 3.0 market, including startup support, and to encourage assets to return to Japan. In addition, we need to take measures to foster the Japanese market and strengthen its competitiveness through tax reforms, such as making cryptocurrency eligible for loss carryover deductions, just like stocks and investment trusts." He then said, "I believe it is urgent to improve the trading environment for cryptocurrency ETFs," and asked Prime Minister Ishiba for his views.

In response, Prime Minister Ishiba replied, "Regarding the tax law on crypto assets, there are issues such as whether the public will understand that a maximum 55% tax rate is applied to income such as salary, while a 20% tax rate is applied to income from crypto assets, and whether it is appropriate for the country to encourage households to purchase crypto assets like stocks and investment trusts, which have investor protection regulations in place, and I believe that careful consideration is necessary." Furthermore, regarding crypto asset ETFs, he stated, "I believe that consideration is necessary in light of whether crypto assets should be considered as assets that need to be made easier for the public to invest in," showing a negative stance.

There have been cross-industry proposals and requests from domestic self-regulatory organizations and the financial industry regarding the application of a 20% separate reporting tax on crypto asset profits and the realization of crypto asset ETFs, whose trading is becoming more active mainly in the United States, but Prime Minister Ishiba appears to be following the thinking of the LDP so far.

In response to Prime Minister Ishiba's response, Yuichiro Tamaki, leader of the Democratic Party for the People, commented that he was "disappointed." He harshly criticized the government, saying, "There was no response to the application of 20% separate taxation and loss carryover deduction. They are even reluctant to consider cryptocurrency ETFs. The gap between us and the United States, which aims to become a Bitcoin powerhouse, will continue to widen."

暗号資産の税制改正に関する石破総理の答弁にはがっかりだ。20％の申告分離課税や損失繰越控除の適用もゼロ回答。暗号資産のETFにまで消極的。ビットコイン大国を目指す米国とどんどん差がついていく。検討ばかりでWeb3先進国にするとの国家戦略はいったいどこに行った？国民民主党が頑張るしかない。

— 玉木雄一郎（国民民主党代表） (@tamakiyuichiro) December 2, 2024

The Democratic Party for the People has included in its policies the application of 20% separate taxation and three-year loss carryover deduction for profits generated from cryptocurrency, as well as the realization of cryptocurrency ETFs and an increase in the leverage ratio from the current 2x to 10x.

Prime Minister Ishiba's response this time is contrary to the "Web 3.0 superpower" of Japan that was set during the Kishida administration, and disappointment is spreading both inside and outside the industry. In the United States, President-elect Trump has shown a positive attitude toward cryptocurrency, highlighting the difference in stance between Japan and the United States.

Reference: House of Representatives plenary session , Democratic Party for the People Policies
Image: Shutterstock

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