Despite the collapse of FTX, Japan’s ruling Liberal Democratic Party is moving ahead with plans to make the country a more attractive place for crypto companies to set up shop.
The Japanese government has announced plans to exempt firms issuing cryptocurrencies from a 30% tax on paper-only gains.
The ruling Liberal Democratic Party approved a plan Thursday to exempt crypto-issuers — meaning companies developing crypto technology and platforms — from the 30% tax on unrealized crypto gains, Yahoo Finance reported.
Currently, if a company holds tokens they bought for $100 that grow to $200 during the tax year, it would owe $30 on that $100 gain — even if it did not sell those tokens and risks having their value decrease again.
By enforcing the capital gains tax on those paper-only profits, the country has made it very hard for corporate investors to hold tokens in hopes the projects will succeed — which in turn made it very hard to raise funds by issuing cryptocurrencies.
“Japan is an impossible place to do business,” Sota Watanabe, CEO of DApp and smart contract firm Astar Network and Stake Technologies, told the Japan Times this summer.
He moved his firm to Singapore, in large part because of the tax issues. “The global battle for a Web 3.0 hegemony is underway, and yet, Japan isn’t even at the start line,” he said.
More broadly, the administration of Prime Minister Fumio Kishida is trying to woo the crypto industry by cutting red tape and investing in the NFT and metaverse industries, Yahoo Finance noted.
Beyond that, the Japan Virtual and Crypto Assets Exchange Association (JVCEA), a crypto exchange self-regulatory body, announced plans in October to cut back the lengthy screening process for listing tokens.
The move comes despite the industry upheaval caused by the collapse of the FTX exchange, which is causing elected officials and financial regulatory organizations around the world to double down on crypto financial firms.
