Finance Minister Taro Aso suggested he was unwilling to push for lowering the tax rate on cryptocurrencies in Japan to a flat 20% because it’s difficult for many households to invest in digital assets.
Aso was responding to a question from Japan Restoration Association member Shun Otokita at a meeting of the House of Councillors Committee on Financial Affairs which convened on June 2.
“Out of 1900 trillion yen [17.6 billion USD] financial assets held by households in Japan, around 900 trillion yen [8.4 billion USD] is now being held as cash deposits and that is abnormal,” said Aso.
Despite Japan being the birthplace of cryptocurrency, the country still has many cash-based businesses and individuals who keep their savings liquid. The Finance Minister went on to claim that it would be difficult to convince investors in Japan to put their cash into crypto, so the tax rate need not be adjusted.
In Japan, nearly all cryptocurrency-related income — from trading, mining, and lending — is classified as miscellaneous income on taxes, subject to a rate up to 55%. However, the country taxes stocks at a flat rate of 20%, something pro-crypto legislators have been pushing to include digital currency.
Make all crypto ‘stablecoins’?
Under the modifications to Japan’s existing legislation on cryptocurrencies which went into effect May 1, the Payment Services Act (PSA) requires that all references to “virtual currency” be replaced with the term “crypto asset”.
Perhaps jokingly, Aso said: “The word ‘crypto’ sounds a bit shady so why don’t we use the Japanese word for stablecoin? […] Sounds more stable right?”
The Japanese term for crypto assets — angō shisan — uses Chinese characters, while “stablecoin” is derived directly from English.
2x leverage cap for crypto margin trading
Speaking to members of Japan’s Financial Services Agency (FSA) — the country’s financial watchdog — in the same committee, Otokita asked if it was appropriate to cut the leverage cap for cryptocurrency margin trading to 2x with an insufficient amount of time for discussion with experts. The leverage limit was lowered from 4x in the same regulations which took effect May 1.
The agency claimed to have discussed the matter with crypto experts and FX insiders, taking comments from the public into account as well. The FSA has maintained lowering the leverage cap was an appropriate response to the volatility of cryptocurrency, citing fallouts like the March bloodbath.