Japan proposes crypto tax cut to boost investor appeal

Japan’s ruling Liberal Democratic Party (LDP) has proposed reducing the country’s crypto tax rates, signaling a shift in regulatory approach.

On March 6, Akihisa Shiozaki, a member of Japan’s House of Representatives, shared details of the proposal on X, noting that it is open for public feedback until March 30. The initiative seeks to redefine cryptocurrencies as a new asset class under the Financial Instruments and Exchange Act.

According to Shiozaki’s X post:

“[The proposal] positions crypto assets as a new asset class distinct from securities under the Financial Instruments and Exchange Act, aiming to promote market development, protect investors, and implement separate taxation.”

If approved, the proposal would introduce a 20% tax rate for crypto investments, aligning them with stocks and other financial products. This would significantly drop from the current 55% rate, making crypto taxation more favorable for investors.

Meanwhile, the initiative is part of ongoing efforts by the LDP’s Web3 Working Group, led by Shiozaki, to refine Japan’s approach to digital asset regulations. It also suggests that this reclassification could pave the way for spot crypto exchange-traded funds (ETFs) in Japan.

The tax reform push aligns with Prime Minister Shigeru Ishiba’s earlier announcement of a broader plan to update Japan’s crypto taxation policies. The initiative is linked to an economic stimulus package to ease public debt and curb inflation.

Community reaction

The proposal has sparked optimism in the crypto community, with many viewing it as a step toward making Japan one of the most welcoming environments for digital assets.

Crypto analyst Scott Melker noted that high taxes have been a significant obstacle to adoption, and a reduction could drive greater participation in the sector.

Meanwhile, Bitwise’s Head of Alpha Strategies, Jeff Park, suggested that the move could help Japan build a strategic reserve of digital assets. He pointed out that incentivizing domestic crypto investment could position the country more competitively in the global financial landscape.

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