Japanese Exchanges Ask Regulator to Make Cryptocurrency Tax Reforms
The self-governing Japan Virtual Currency Exchange Association (JVCEA) has asked the country’s top financial regulator to change the way cryptocurrency-related earnings are taxed.
The JVCEA represents all of Japan’s licensed cryptocurrency exchanges and a range of blockchain, banking and legal industry stakeholders. The body says that it has filed a document with the regulatory Financial Services Agency (FSA) stating that although it feels much progress has been made with regulations in the industry thus far, tax guidelines are still inadequate.
The JVCEA states that as a recent amendment to Japanese financial law now recognizes cryptocurrencies as bona fide financial assets, they should be taxed accordingly.
The JVCEA has thus proposed the following:
- Citizens who must pay tax on their cryptocurrency holdings should be granted a three-year grace period to obtain necessary documentation/registration information (before fines become applicable).
- Cryptocurrency derivative transactions should be taxed separately, and the transfer of losses should be allowed.
- Small-scale cryptocurrency transactions should not be subject to taxation.
- Cryptocurrency issuance from initial coin offerings (ICOs) should be recognized as a capital transaction rather than taxable income.
- Special tax laws and tax breaks should be introduced for certain investment deals involving cryptocurrency projects.
The demands have taken on a new significance after pro-crypto tax reform lobbyists saw their biggest political ally lose his seat in parliament over the weekend. Former George Soros aide Takesi Fujimaki narrowly lost his bid to retain his seat in the House of Councillors election on Sunday, per NHK.
Fujimaki has spearheaded an influential campaign aimed at changing the way cryptocurrency profits are taxed in the country.
As previously reported, the JVCEA is hoping that the recent resignation of its former president, the SBI Group CEO Yoshitaka Kitao, will not diminish its standing as it aims to shape policy on what many Japanese cryptocurrency enthusiasts feel is now a key issue.
Meanwhile, in the U.S., America’s top tax authority, the Internal Revenue Service (IRS), will update its cryptocurrency guidelines “in the coming weeks,” as reported in July.