The Japan Blockchain Association (JBA), representing top blockchain firms and crypto projects in Japan, has petitioned the government to implement tax reforms related to cryptocurrencies. The JBA is requesting changes to be made ahead of the Financial Year 2025 to address the high tax rates on crypto profits, which it believes are hindering Japanese citizens from saving valuable assets. The association is urging Tokyo to apply the same tax rate as conventional financial assets, such as stock exchange-listed stocks, to crypto transactions.
The JBA has highlighted the complexity of existing tax rules for cryptoassets transactions in Japan and the impact of the sliding scale system of taxation, which deters investors from engaging in crypto markets. Unlike other countries that impose flat-rate capital gains tax on crypto profits, Japanese traders are required to report token-derived profits as “other income” and may face up to a 55% tax rate on their earnings. This disparity in tax treatment is seen as a barrier to the growth of the crypto industry in Japan.
The association has already successfully advocated for reforms in tax laws governing companies to exclude taxes on unrealized crypto holdings. However, it is now pushing for reforms that would benefit individual traders, such as introducing a flat 20% tax rate on crypto profits, allowing for loss carryforwards, abolishing taxes on crypto-to-crypto transactions, and creating tax-free or tax-deductible donation systems for cryptocurrencies. The JBA argues that failing to enact these reforms could lead to a talent drain as individuals and startups seek more favorable regulatory environments abroad.
The urgency of reforming crypto tax laws has been emphasized by the JBA, citing the importance of the web3 sector in driving economic growth and international competitiveness for Japan. It believes that enabling a conducive regulatory environment for crypto assets will allow Japan to position itself as a leader in the next generation of technology. The CEO of bitFlyer and head of the JBA, Yuzo Kano, has stressed the critical nature of crypto tax reform for the long-term prosperity of the Japanese economy and has called on the government to take swift action to make it a reality.
In a recent development, Japanese investment firm Metaplanet has increased its Bitcoin portfolio by acquiring an additional 20.38 Bitcoin valued at $1.2 million. This move underscores the growing interest in cryptocurrencies among institutional investors in Japan and highlights the potential for further growth in the crypto market. With the support of industry players like Metaplanet and the JBA, the call for tax reforms in the crypto space is gaining momentum, signaling a shift towards a more favorable regulatory environment for the sector in Japan.
