Ishiba Uncertain About Japanese Cryptocurrency Tax Reform and Bitcoin ETF Endorsement

Japanese Prime Minister Shigeru Ishiba has conveyed “caution” regarding the elimination of the nation’s contentious crypto tax legislation. Ishiba has also indicated that he will not be hurried into endorsing Bitcoin spot ETFs.

Regulators, government officials, and opposition leaders have come together in advocating for the replacement of the existing framework with a flat 20% capital gains tax on yearly crypto trading earnings.

Nevertheless, the Japanese media outlet CoinPost reported that Ishiba distanced himself from both issues on December 2.

Is Japanese Crypto Tax Reform Off The Agenda?

Ishiba made his comments about crypto taxation in reply to an inquiry from the (opposition) Democratic Party for the People lawmaker Satoshi Asano.

The Prime Minister questioned the “appropriateness” of the government recommending investment in cryptoassets similarly to how it does for stocks and investment trusts.

Japan’s New Prime Minister Reorganizes Web3, Crypto Policy Units

He pointed out that these conventional financial instruments “have investor protection regulations in place,” which crypto lacks.

He also proposed that the public may not fully “understand” matters related to the “separate reporting of taxable income.”

“Issues like these require careful consideration.”

Japanese Prime Minister Shigeru Ishiba

Currently, Japanese crypto investors are required to declare their crypto trading gains on annual tax returns, where they must report under “other income.”

During parliamentary questioning on Monday, Prime Minister Shigeru Ishiba faced scrutiny over topics ranging from the Liberal Democratic Party’s approach to political reform and his views on social issues to the details of a supplementary budget. https://t.co/aLh55q6Ap7

— The Japan Times (@japantimes) December 2, 2024

This implies that, depending on their annual earnings, they may incur taxes ranging from 15% to 55% on their crypto trading profits.

Critics argue that this is profoundly unjust. They assert that Japanese crypto tax regulations are misaligned with those of other developed nations.

Most of these countries generally require citizens to pay capital gains tax on “realized” crypto trading profits.

Ishiba also provided a non-committal response when questioned about his position on crypto ETF approval. He stated:

“The question of whether or not cryptoassets should be included in ETF offerings needs to be considered based on whether or not we should really strive to make it easier for the public to invest in cryptoassets.”

Bank of Japan Governor Kazuo Ueda has ample data to support the argument for increasing the benchmark rate in December, an outcome that would represent the first tightening of policy three times in a calendar year since 1989 https://t.co/EpbXpScHYt

— Bloomberg (@business) December 3, 2024

Asano commented that the current regulations that “impose a maximum 55% tax in Japan” were “holding” the country “back.”

He claimed they are “causing web3 companies and [capital] to flow out of the country.”

Cambodia blocks access to 16 crypto exchange websites https://t.co/CYILxRKj1a

— Nikkei Asia (@NikkeiAsia) December 3, 2024

Japan Crypto Tax Law and Bitcoin ETFs: PM Cautious

On X (Twitter), Yuichiro Tamaki, the leader of the Democratic Party for the People, criticized Ishiba’s position on the issue. He described Ishiba’s response to the crypto tax inquiry as “disappointing.”

“The PM gave no response to the [crypto tax question]. He is even reluctant to consider crypto asset ETFs. The gap between Japan and the United States, which aims to become a Bitcoin powerhouse, is growing ever wider.”

Tamaki

Tamaki concluded by questioning:

“What on Earth has happened to the national strategy of becoming a major power in the web3 sector?”

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