Yuichiro Tamaki, leader of Japan’s Democratic Party for the People, is making an effort to woo voters by “proposing clear tax cuts and regulatory reforms regarding cryptocurrencies” ahead of national elections on Oct 27.
“If you think crypto assets should be taxed separately at 20% instead of treated as miscellaneous income, vote for the Democratic Party for the People. There will be no tax when exchanging crypto assets with other crypto assets,” he posted on X on Oct 20.
The DPFP – the sixth largest in the Diet’s House of Representatives, the lower house of Japan’s bicameral legislature, with seven seats – is also pushing for the launch of crypto exchange-traded funds and the conversion of the yen into an electronic currency, as well as the issuance of “digital regional currencies” by local governments to revitalize local economies.
The crypto tax regime in the country has long faced criticism from investors. Under the current system, crypto profits are taxed as income, meaning high earners can be taxed as high as 45% if their income is over 40,000,000 yen ($265,000). Meanwhile, capital gains from sales of securities such as shares face a flat rate of 20%.
But Tamaki isn’t the only politician advocating for changes in this policy. Crypto tax policies have been under review in Japan for the last two years. Last year, the country announced crypto holders would no longer face taxes on unrealized gains, while a policy document released by the Financial Services Agency in September recommended considering whether crypto assets should be treated as financial assets.
The Sunday general election comes as Shigeru Ishiba, the Liberal Democratic Party leader who became prime minister in September, seeks to solidify his position following a party campaign funding scandal. His predecessor, Fumio Kishida, was a strong advocate for web3, referring to it as a “new form of capitalism”.
In April, the Liberal Democratic Party released a white paper on its own approach to web3 and blockchain. Its then-web3 project team head, Masaaki Taira – who became Minister for Digital Transformation at the start of October – has also called for reforming the tax system for cryptocurrencies and the promotion of web3 and blockchain. He has also pointed out that Japan had an opportunity for growth through its gaming industry and the development of web3 games.
The country’s second largest party, the Constitutional Democratic Party of Japan said it too would review the crypto tax system, which it sees as closely related to the development of web3 in the country. It wants to establish a legal framework for DAOs to clarify their status and the obligations of members and participants.
The party would also consider the use of CBDCs, including ongoing pilot projects such as that of the Bank of Japan, as a means of diversifying payment methods and reducing costs.
