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Japan’s Crypto Revolution: Tax Reforms Pave The Way For Web3 Growth

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The Japan Blockchain Association (JBA) is actively making substantial efforts to revamp the crypto asset tax system in Japan with the goal of nurturing a more conducive environment for the growing Web3 industry. Yuzo Kano, the representative director of bitFlyer Inc. and the JBA, has taken the initiative to submit a comprehensive request to the government concerning this issue.

One of the primary requests put forth by the JBA is the elimination of the year-end unrealized gain taxation on third-party issued tokens. While Japan’s National Tax Agency already amended some corporate tax rules to exempt the mark-to-market valuation of a company’s crypto assets.

This request seeks to abolish the year-end unrealized profit tax on tokens issued by third parties,thereby removing a considerable obstacle for domestic companies venturing into the Web3 industry.

Additionally, the JBA advocates for a revision in the taxation approach for individual crypto-asset transactions. They propose implementing a separate self-assessment taxation system, featuring a uniform tax rate of 20%.

The current tax system has discouraged some potential investors, but the JBA’s survey indicates that many would be willing to increase their investment if this taxation method were adopted.

Elimination Of Income Tax On Crypto Exchanges

The JBA seeks the elimination of income taxation on profits generated from exchanging crypto assets. This proposal aims to facilitate seamless operations for various use cases, including DeFi and NFT markets, ultimately leading to increased convenience and accessibility of crypto assets.

The proposed tax reforms align with the JBA’s vision for Japan to be recognized internationally as a Web3-advanced country. They believe that embracing these changes will lead to the growth of the Web3 economic zone and foster innovation in the country’s economy.

Critics underscore­ the importance of widespre­ad support and understanding of crypto assets in Japan for the succe­ssful implementation of tax reform. Gaku Saito, CEO of pafin Co., Ltd. and chair of JCBA’s tax re­view committee, highlights the­ significance of generating social mome­ntum and enhancing people’s live­s to accomplish these reforms.

The Japan Crypto-Asse­t Business Association (JCBA) and JBA have jointly reque­sted tax reform in 2022. They are­ currently discussing this matter with the Financial Se­rvices Agency.

Japan’s potential tax re­forms have the power to e­levate its global position in the re­alm of crypto-assets. Anticipated surges in both use­r engagement and inve­stment are projecte­d to bolster tax revenue­s significantly. 

However, presently situated at the­ 15th spot in worldwide rankings, Japan aspires to eme­rge as a prominent player within the­ Web3 economy, there­by fostering robust economic growth and advanceme­nt.

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Crypto Compliance – bitFlyer Implements Travel Rule For Secure Remittances: Report

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BitFlyer, one of Japan’s prominent cryptocurrency exchanges, has recently made an important announcement that is set to impact its customers. Effective from May 30th, the exchange will only support cryptocurrency deposits and transfers from exchanges or wallets that comply with the travel rule.

The travel rule, established to curb illicit activities such as money laundering and terrorist financing, requires exchange companies to share detailed information about the remittance requester and recipient when a user requests to send virtual currency. 

Supported Crypto Assets Under TRUST System

To comply with this rule, bitFlyer will restrict deposits and remittances of crypto assets to exchanges that have implemented the Travel Rule Universal Solution Technology (TRUST) system.

However, this restriction applies only to 21 countries and regions that enforce information notifications based on travel rules. Customers can continue sending and depositing virtual assets with exchanges based in countries outside this list. 

It is worth noting that bitFlyer will only support certain digital assets under the TRUST system, namely Bitcoin (BTC) and Ethereum (ETH), along with ERC-20 standard tokens such as Basic Attention Token (BAT), Chainlink (LINK), Polygon (MATIC), Maker (MKR), Shiva (SHIB), and Palette (PLT).

Coincheck, another cryptocurrency exchange in Japan, is the sole exception that allows domestic remittances and deposits during this period. Presently, customers can only deposit and transfer Bitcoin between Coincheck and bitFlyer. 

However, bitFlyer mentioned the possibility of expanding the trading options to include Ethereum (ETH) and other ERC-20 standard crypto assets in the future, pending Coincheck’s development.

It is essential to understand that different companies have adopted various solutions to comply with the travel rules. While bitFlyer and Coincheck utilize the TRUST protocol, other domestic companies such as GMO Coin and bitbank have opted for the Sygna Alliance system. 

Currently, these two protocols are incompatible, restricting crypto asset transfers even among other licensed exchanges regulated by the Financial Services Agency in Japan.

Internationally, major US companies like Coinbase and Circle use the TRUST system. However, in Japan and the Asia-Pacific region, exchanges primarily employ Sygna, developed by CoolBitX in Taiwan.

The Travel Rule was proposed by the Financial Action Task Force (FATF) to prevent the misuse of cryptocurrencies by criminals and terrorists. 

The Japanese government enacted the “Law for Partial Revision of the Law Concerning Funds Settlement, etc. to Build a Stable and Efficient Funds Settlement System” to comply with this rule by June 9th, 2011. 

This revision obligates Japanese crypto-asset exchanges to provide information such as the remittance/recipient name and customer identification number before sending crypto-assets.

In light of these developments, it will become necessary for general users to verify the protocol employed by their chosen exchange and select an exchange or wallet that enables them to make compliant remittances. 

As the travel rule implementation progresses, ensuring regulatory compliance will be crucial for all stakeholders in the crypto industry.

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Shiba Inu Gains Major Exposure With This Listing

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Efforts of the Shiba Inu army finally prevailed, as the popular meme token is set to go live on a leading Japan-based crypto exchange BitFlyer.

Although the specific dates are yet to be announced, the trading platform unveiled a lottery with a prize pool of 10,000 yen for 20 eligible winners to commemorate the listing.

As per the translated tweet of BitFlyer, the promotion will begin on March 22 and conclude as soon as it begins handling SHIB.

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Shiba Inu Gains Major Exposure With This Listing 2

The latest listing was possible, thanks to the efforts undertaken by the Shiba Inu community to get the token listed on japan’s top crypto exchange.

A member of the Shiba Inu community who uses the Twitter handle @Cheggy19 took it upon themself to lead the charge to list SHIB on Japanese cryptocurrency exchanges.

Founded in 2014, the trading platform is the largest bitcoin exchange in the world by volume, transacting $250 billion year-to-date, and has over 2.5 million users worldwide.

In further testimony to its huge demand from the nation’s crypto investors, OKCoin Japan began trading the second-largest meme coin on February 28.

The most notable disclosure was made by Binance US, the US subsidiary of the well-known cryptocurrency exchange Binance, who revealed through Twitter in mid-February that trading for SHIB/USD is now supported on their platform.

As reported by TronWeekly, the addition of SHIB on Binance US is regarded as a crucial turning point for the ecosystem of the token because it increases its exposure and accessibility to investors in the US.

Having said that, SHIB’s project lead Shytoshi Kusama constantly influences the ecosystem of the meme token through his tweets, most recently teasing the introduction of the Shibarium beta on multiple occasions.

Shiba Inu Price May Pull A Surprise

Shiba Inu’s price has stabilized since it fell to an all-time low in June of last year. Experts predict that similar to what has happened in the rest of the crypto market, there may be further consolidation in the Shiba Inu ecosystem in the upcoming quarters.

Nonetheless, a supply and demand shock following the debut of Shibarium beta may cause the Shiba Inu price to pull off a surprise breakthrough.

At the time of writing this piece, the 13th-ranked token was up 3% in the last 24 hours to trade at $0.000010.