Why Japan Could Ease Crypto Rules To Revitalize Its Economy
According to a report from Bloomberg, crypto investors in Japan may soon benefit from a change in the country’s regulation. Japan’s Financial Services Agency (FSA) has submitted a proposal that will provide benefits to individual and corporate investors in the digital asset sector and the legacy financial sector.
The shift in crypto regulations follows a strategy promoted by the Japanese leader that aims to support a revitalization of the economy. The Asian country has been hit by two years of a global pandemic, a rise in global inflation and decades of economic decline.
Japan’s financial regulator wants to give investors tax exemptions for profits generated by crypto and stock investments. In addition, the FSA wishes to implement a permanent program to incentivize individuals and institutions to invest in the nascent and legacy asset classes.
The new Japanese administration led by Fumio Kishida of the Liberal Democratic Party is trying to implement a plan called “New Capitalism” and boost the country’s economy. Kishida vowed to increase the average wealth of Japanese households and has pledged to support the growth of crypto companies and the digital sector, especially those working on “Web3”.
The Asian country has a tax relief initiative, the report claims, called the “Nippon Individual Savings Account”. The FSA has proposed extending this initiative by raising the investment limits and extending the duration to provide investors with a capital gains tax allowance over a specified period of time.
Right now, Japan is implementing a 30% tax on profits and unrealized profits for crypto investors. This can act as a deterrent to push people away from putting money into the nascent and legacy financial sector.
Data from Bloomberg claims Japanese people have most of their savings in cash and bank deposits, which is contributing to the lack of momentum in the national economy. In addition, many companies have chosen to set up shop in friendlier countries, such as Singapore.
Japan seeks to attract crypto investment and increase spending
The Asian country has limited citizens’ access to the crypto economy. Japanese are allowed to invest in certain digital assets.
This has pushed many crypto companies in the country to ask for fewer taxes and more flexibility, allowing companies to launch their projects in Japan. The FSA proposal could be the first step in that direction. The government could announce a decision by the end of the year, Bloomberg claims.
In addition to the possible change in the tax rules, the country has encouraged people to spend more money and the younger population to “drink more alcohol”, according to a separate report. This initiative was launched by the country’s National Tax Office (NTA).
The Asian nation has one of the highest elderly populations in the world. This has led to a sharp decline in tax revenue from the domestic alcohol market. In 2020 alone, Japan lost over $100 billion on alcohol sales.
It remains to be seen whether any of these measures will have a positive impact on Japan’s economy. At the time of writing, Bitcoin (BTC) is trading at $20,100 with sideways movement on the 4-hour chart.
