Taro Aso may not be able to endorse legislation in Japan that handles cryptocurrency-related earnings the same as stock revenues.
Finance Minister Taro Aso indicated that he was reluctant to press for a flat 20 percent reduction of the tax rate on cryptocurrencies in Japan, since investing in digital assets is hard for many households.
Aso addressed a question from member of the Japan Restoration Association Shun Otokita at a meeting of the Financial Affairs Committee of the House of Councillors that was convened on June 2.
"Out of 1900 trillion yen [US$ 17.6 billion] of financial assets owned by households in Japan, approximately 900 trillion yen [US$ 8.4 billion] are now owned as cash deposits and that's odd," Aso said.
Despite Japan being the birthplace of cryptocurrencies, the country still has several cash-based companies and individuals who hold their savings liquid. The Finance Minister went on to say that it will be difficult to convince Japanese investors to put their cash into cryptography, so that the tax rate would not need to be changed.
In Japan, almost all cryptocurrency-related revenue from trading, mining, and lending is listed as tax-related revenue, subject to a limit of up to 55%. Nonetheless, the nation taxes stocks at a flat rate of 20 per cent, something pro-crypto lawmakers have been pressing for digital currency inclusion.
Make all crypto ‘stablecoins’?
Under the amendments to the current cryptocurrencies legislation in Japan which came into force on May 1, the Payment Services Act (PSA) mandates that all references to "virtual currency" be substituted by the word "crypto asset.'
Maybe jokingly, Aso said: "The word 'crypto' sounds a little mysterious so why should we not use the Japanese word for stablecoin? [...] Sounds more stable right?"
The Japanese word for crypto-assets — angō shisan — uses Chinese characters whereas "stablecoin" comes from English directly.
2x Leverage cap for dealing with crypto-margins
Speaking to members of Japan's Financial Services Agency (FSA) the country's financial watchdog on the same committee, Otokita asked whether it would be appropriate to cut the leverage cap for cryptocurrency margin trading to 2x with insufficient time for expert discussion. In the same regulations which took effect May 1 the leverage limit was lowered from 4x.
The agency claimed it had discussed the matter with crypto experts and FX insiders, also taking into account comments from the public. The FSA maintained lowering the leverage cap was a suitable response to cryptocurrency volatility, citing fallouts such as the March bloodbath.
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