Japan’s FSA Eyes Crypto Tax Cuts in Upcoming Crypto Regulatory Review

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A Bloomberg report revealed that Japan is gearing up for a comprehensive crypto regulatory review, which could reshape its digital asset landscape.

The Financial Services Agency (FSA) will assess whether the current framework, which regulates cryptocurrencies under the Payments Act, is still suitable given digital tokens’ evolving role.

The review could lead to lower taxes on crypto gains and significant changes in how cryptocurrencies are treated in Japan. One possibility is to reclassify them as financial instruments under the nation’s investment law.

The FSA’s review, which will likely continue through the winter, aims to determine whether the Payments Act adequately protects investors, as cryptocurrencies are now predominantly used for investment rather than as a medium of exchange.

If reclassified under the Financial Instruments and Exchange Act, cryptocurrencies would be subject to stricter investment laws.

Yuya Hasegawa, a market analyst at Bit Bank Inc., noted that such a shift could bring “dramatic changes” to Japan’s crypto market.

It could potentially lower the tax rate on crypto gains from as high as 55% to 20%, aligning them with other financial assets such as stocks.

Lowering taxes has been a long-standing goal for Japan’s crypto executives, who have argued that the current tax rates stifle growth and increase operational costs.

The FSA could provide much-needed relief to the industry by reducing the tax burden and encouraging more investment and innovation in the sector.

The review might also lead to lifting bans on