Japan moves to keep crypto profits in the country as Paraguay vetoes a crypto mining bill

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(Kitco News) – Cryptocurrencies continue to see a range of reactions from governments around the world as some have embraced the emerging asset class, while others seek to ban certain aspects of their use to protect their financial interests.

Japan is firmly in the camp to promote the benefits of crypto, as evidenced by a new proposal from the Financial Services Agency (FSA), the country’s financial regulator, which looks to ease corporate tax on crypto gains in an effort to help boost its economy.

Based on the proposed revision, the FSA wants to exclude companies from paying tax on paper gains on cryptocurrencies they hold after issuance. It also calls for improving a program that gives tax breaks to individual investors.

The agency is making the move in an effort to support Prime Minister Fumio Kishida’s “new capitalism” vision that seeks to revive the world’s third-largest economy. As part of his goal, Kishida has promised to help grow the country’s Web3 businesses and double the wealth of households.

The current corporate tax rate of 30% is applied to profits from cryptocurrency holdings, including unrealized gains, which has led some companies to relocate to Singapore or other jurisdictions. This move by the FSA is designed to combat this problem and encourage these companies to remain in Japan.

Paraguay’s President Vetoes Bitcoin Mining Bill

Meanwhile, across the Pacific in Paraguay, news comes that Paraguayan President Mario Abdo Benítez has vetoed a popular bill that would have legalized and regulated the bitcoin and cryptocurrency mining industry in the South American country.

The plan laid out in the bill was to use surplus electricity generated by hydroelectric plants in the country to mine BTC and other cryptocurrencies. Hydropower is abundant in Paraguay, and two of the largest hydroelectric stations reportedly create a large amount of surplus energy that is currently being wasted.

Miners would be allowed to set up their operations at data centers near the power plants, harnessing the wasted energy and providing a new source of income for the Latin American nation.

The bill was initially approved by the Senate in late December, but Benítez saw the mining industry’s electricity consumption as unsustainable in the long run and chose to veto the bill rather than sign it into law.

According to Benítez, cryptocurrency mining “requires a high level of power consumption that can compromise the development and expansion of an inclusive and sustainable national industry.”

Citing advice he received from the county’s central bank, which opposed the new initiative, the president also pointed to the fact that mining requires “intensive use of capital and low use of labor,” and “as such does not generate added value” to the economy.

Supporters of the bill highlighted the fact that Paraguay’s infrastructure is set up to consume fossil fuels instead of hydropower, meaning that 10% of the country’s hydropower is “unusable” in the nation.

For now, the companies that choose to continue crypto mining in the country will have to operate in the “grey”, unregulated zone.