Japanese Representative Says Taxes Are Crippling the Growth of Crypto and Blockchain
Takeshi Fujimaki, a member of the House of Councillors of Japan and acting President of the Japan Restoration Committee, says the country’s tax system is slowing the development and adoption of cryptocurrency and blockchain technology. The Financial Supervisory Authority is proposing tax reforms that make it possible for crypto enthusiasts who spend, trade or hodl their investments to do so without burdensome tax laws.
“Today I received an explanation of the Financial Supervisory Authority’s submission bill. One is a crypto asset related bill. I asked some points about ‘the bill from the viewpoint of customer protection and the viewpoint of promoting innovation.’ It is the tax system that inhibits the development of cryptocurrency and blockchain.
If you want to promote cryptographic assets and blockchains, the FSA is also making a request of the tax authority.”
Reported by local news outlet CoinPost, the proposed tax system recognizes that there are different use cases for cryptocurrencies generating different types of transactions. Each should be taxed separately and accordingly.
If someone receives their salary in Bitcoin or other cryptocurrency, they should be fully taxed.
If someone reaps a trading gain, they should not be fully taxed.
The volatility of crypto trading makes it possible for traders to sustain losses for years. Loss carryforward deductions should apply as they do with other assets such as stocks and mutual funds.
Currently in Japan, a crypto investor isn’t allowed to carry over trading losses to the following year. So there could be a scenario where a trader incurs a loss this year, followed by a fair profit the following year but the overall profit/loss is still negative – and the trader has to pay taxes.
Tax exemption for crypto-to-crypto trading
Calculating the profit and loss for each and every crypto-to-crypto trade is extremely complicated and burdensome. This alone discourages people from participating in the cryptocurrency market and dampens liquidity. To increase trading volume and stimulate the market, trading between cryptocurrencies should be tax free.
Make small amount settlements tax-free
The settlement of cryptocurrencies in the real world is where innovators and developers expect massive adoption. To make it happen, small crypto transactions should be exempt from taxation, allowing crypto payments in the real world to grow.
Currently the Japanese yen is the second most traded national currency for Bitcoin, accounting for 43.31% of the market. The US dollar is number one at 44.23% of the market, according to data compiled by Coinhills.