#Japan #Tokyo #Web3.0 #JCBA #JVCEA

JCBA and JVCEA Submit Tax Reform Proposals for Cryptocurrency

On July 30, 2023, the Japan Cryptoasset Business Association (JCBA), led by its president Noriyuki Hiromsue, submitted a reform proposal to the Japanese government regarding tax regulations for cryptocurrency assets for the fiscal year 2026. This submission was prepared in collaboration with the Japan Virtual Currency Exchange Association (JVCEA), headed by president Genki Oda, through the dedicated tax reform committee chaired by Takashi Saito.

Purpose of the Proposal

The proposal aims to address the emerging paradigm of Web3.0, which refers to a new layer built atop traditional internet frameworks, empowered by blockchain technology. This technological evolution enables value creation, ownership, and exchange without intermediaries, presenting a significant opportunity for innovation and economic growth in Japan. The concept of a 'value internet' allows for unprecedented levels of collaboration and transaction capabilities, creating the potential for rapid advancements in the provision of services. The Japanese government is also keen on fostering the climate for Japan's Web3.0 innovation as part of its national strategy.

There has been a marked emphasis on reform in the tax system to align with the government's agenda: the ruling party's tax reform plan for 2025 specifies the necessity for regulatory measures concerning certain cryptocurrency assets, alongside a review of taxation concerning cryptocurrency transactions. Notably, the government's vision for 'Digital Nippon 2025' stresses improving the integrity of markets, protecting investors, and establishing cryptocurrency as a credible asset class measured against global standards.

Global Context and Need for Reform

In contrast, the U.S. has embarked on a noteworthy transformation of its cryptocurrency policies under the leadership of a former administration, positioning itself as a global leader in the crypto sector. To reclaim leadership in the Web3.0 domain, Japan must adopt a competitive stance to enhance its market position. Presently, existing tax laws hinder public engagement with cryptocurrencies, creating a significant barrier to Japan's ambitions to revive its market standing in Web3.0.

Given the ongoing evolution, the tax system must be neutral and treat cryptocurrencies similarly to other financial assets, akin to stocks. Currently, Japan is considering regulations to categorize cryptocurrencies as financial products, which raises a prime opportunity to construct a balanced tax regime applicable to cryptocurrency trading. Creating a tax framework that promotes transactions via wallets on the blockchain aligns well with global standards and would foster greater engagement among individual traders, promoting domestic Web3.0 adoption.

Future Steps

The JCBA and JVCEA have voiced their expectations for beneficial regulatory changes regarding cryptocurrency taxation, targeting market vitality and sector development. As Japan embraces strategies to promote the Web3.0 ecosystem, ongoing discussions among relevant stakeholders will continue to shape the implementation of these recommendations.

Both associations will maintain dialogues as they aim to illuminate the pressing need for coherent regulatory frameworks that can spur growth and innovation in Japan's cryptocurrency landscape, ultimately amplifying its trajectory within the global market.

For more information, the detailed proposals and comparative documents on cryptocurrency taxation by various nations are available for download. The JCBA actively engages in facilitating knowledge sharing among its members to bolster the cryptocurrency industry within Japan.

Additional Information

• - JCBA Overview: The Japan Cryptoasset Business Association was established in March 2016, focusing on facilitating business environments for crypto-related ventures.
• - Current Membership: The association comprises 150 entities, ranging from startups to established firms in the cryptocurrency domain, engaging in collaborative efforts to enhance the industry's future.

With continuous advocacy for regulatory reform, the initiatives by the JCBA and JVCEA aim to ensure that Japan remains competitive in the global Web3.0 landscape while addressing investor protection and market health.