Minister of Finance in Japan Opposes Lowering Tax on Crypto

Taro Aso is not in support of creating a law that will consider crypto and stocks investments to be the same.

Taro Aso, in his capacity as the finance minister, made it known that he wouldn’t support reduction of tax rate on cryptocurrencies. Although some other legislators in Japan wants it to be reduced to a flat rate of 20% he is saying “no” based on the fact that many households cannot invest in digital assets.

His opinion on this was made clear when he answered Shun Otokita, a member of the House of Councilors Committee on Financial Affairs, during a meeting held on June 2.

Aso responded thus:

 “Out of 1900 trillion yen financial assets held by households in Japan, around 900 trillion yen is now being held as cash deposits and that is abnormal.” 

Although cryptocurrency started in Japan, many people still enjoy doing business with cash and this has made more cash-based businesses to continue to thrive. Aso said that since it won’t be easy to persuade investors in Japan to move to crypto, there is no need to change the tax rate.

The tax rate on crypto in Japan is currently at 55%. This applies to money realized from trading, lending and mining. They are all classified as miscellaneous income which has the same tax rate of 55%. On the other hand, incomes from stocks are taxed 20%. Legislators supporting cryptocurrency in Japan wants taxes on cryptocurrency to be on the same level with stocks.

Should all crypto be converted to stablecoins?

According to the new regulations governing the use of virtual currencies in Japan, it is now the norm to regard all virtual currencies as crypto assets. This was enshrined in the Payment Services Act (PSA) which became effective on May 1.

But Aso prefers to call it stablecoins and not crypto because crypto, according to him, sounds shady.

2x or 4x leverage cap

Otokita, in a meeting with other members of Japan’s Financial Services Agency (FSA), asked if lowering the market capitalization of crypto margin trading from 4x to 2x was proper. He was of the opinion that the decision was taken in a hurry and that experts in the field should have been consulted before it became effective on May 1.

In response, the agency said it consulted experts and that it also considered the opinions of the public. FSA was optimistic that the decision taken will help to check volatilities of cryptocurrencies in the future.

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