The current wave of anti-crypto stance by different nations
Japan has made some taxation laws that make it an unattractive country for crypto firms to thrive. Despite pleas from various quarters, the government is not bulging in its decision.
The past year has been the most cryptocurrency-diverse. With many tokens hitting record highs, the increased wave of Decentralized finance, and the great availability of digital marketplaces, there has been a massive wave of crypto adoption in the world just in one year. Despite these, there has been some antagonism against the digital market. Japan is not the first country to go against crypto investors and traders. Neither do we expect it to be the last. . Last year saw China ban bitcoin mining and related activities, leading many mining companies to flee to the United States, Russia, and Kazakhstan. Turkey also placed an embargo on crypto activities and went further to place cryptocurrency exchanges on the list of terrorism sponsors. While these countries have been vocal about their stance on cryptocurrency, there are a few others that are not coming out in the open to ban or accept digital currency trading, and no one can predict the choices they would make as regards cryptocurrency companies. India and Russia are the most popular countries in this category, and we expect to see more clarity this year. Without further ado, let us look at the bitcoin japan news to understand the darts thrown by the Japanese government to throw most crypto companies out.
Japan’s joins the list of crypto-taxing countries
In December, Japan’s ruling party approved a plan to tax cryptocurrency tokens. These crypto taxes are quite audacious, and they target companies that list tokens. Details on the listing are clear, and they include
- Token issuers are legally answerable to the government’s tax bodies on the number of tokens they have listed on the active market.
- Even if a project does not list all its tokens, it would still need to pay taxes on the kept tokens if the prices go up.
- There are times the team does not have enough money to pay the taxes. In cases like this, the startups are coerced into selling more tokens to the public crypto market, hence diluting the price and the future goals of the company.
- If the token is released to the public via an airdrop, both the recipients and the issuer will pay taxes.
- The current rate of taxes on token issuers is around 35%, but it can sometimes go as high as 55%.
- Even if a change is to occur, it would be after one year, meaning the current law would remain the same for the foreseeable future.
Due to this policy, many crypto investors are taking their capital and investing them in foreign brokers to avoid these taxes, and it has also given rise to an immeasurable increase in Defi and Peer-to-peer activities in the country.
In an interview with the founder of Grace, Mai Fujimoto, she admitted to knowing eight companies that have left the country because of this law. One of these companies is Astar Network, a multichain DApp. Its founder, Sota Watanabe, expressed his concerns over the vagueness of the rules. There is no definitive meaning of an active market. While some of the best crypto exchanges like Binance, Coinbase, and redot.com are seen as active markets, low-volume exchanges or decentralized exchanges are left in the dark about their position in this law.
Japan’s Financial Services Agency (FSA) mentioned setting up a DeFi study board in July last year. The group consisted of legal scholars with the exception of the Chief Technology Officer of LayerX. Even with this, little has been done to stop people from migrating, and there is nothing incentivizing people into building the local crypto economy. Watanabe’s company has been moved to Singapore to escape the jaws of the Japanese government, and he has taken it up as his responsibility to help younger Japanese crypto companies if they would like to move to Singapore. His total cost of setting up his company in Singapore was roughly $200,000, and this fee covered both the legal and accounting fees.
Another Japanese crypto personnel explained that he left for Switzerland after failing to see a way out from the country’s crypto tax problems. Having expected the Japanese crypto space to look like China’s adoption to the homegrown country fostering internet adoption, it was quite shocking and embarrassing of him to see that this might never be true.
Can things change?
If we look holistically at the crypto taxes, we will notice that the government has ulterior motives beyond the taxes. This is not an attempt to berate the government of sorts, but it is also not the first time we are seeing taxation on cryptocurrencies. Countries like Australia and Malta have bitcoin taxes, and so does Liechtenstein, but even at such, the taxes are not as outrageously looking as Japan’s crypto taxes.
To put it in perspective, within Japan, taxes on stock investment are as low as 20% for individuals; while this is still considered high by citizens of some countries, how do we want to classify a 35%-55% tax on digital tokens. If the current stock taxes are used for crypto, the crypto firms will be raking in almost 20 trillion yen yearly. (175 billion USD).
What we can infer is that the government wants to prohibit crypto activities. Still, instead of following China’s approach of banning crypto mining activities, they are discouraging firms from staying through hefty taxes.
Japan has mostly been playing second fiddle. It lost the bragging rights on the internet and automobiles to the USA due to conservative approaches towards these revolutions, and it has also gotten far behind in electrical appliances, coming after China and South Korea. This is another golden opportunity presenting itself as cryptocurrency, and if the government does not change the crypto tax law, the game might be well over even before it has started. New means of adoption, fast-paced crypto platforms like kucoin and Redot, and even upgrades on popular protocols are sure to leave japan far behind.
Read More: Japan looks to Ban Crypto Activities but Using a Unique Strategy – Market Research
