Japan’s finance minister Taro Aso says he is opposed to reducing tax on bitcoin income to 20%, on par with stock dividends, arguing that most Japanese households find it difficult to invest in digital assets.
The development suggests that Japan will uphold its current definition of cryptocurrency as miscellaneous income, whereby virtual currency is taxed at rates of up to 55%.
Players in the crypto sector have been pushing for new legislation that would categorize cryptocurrency as stocks for similar tax treatment.
While responding to a question from Japan Restoration Association (JRA) member, Shun Otokita, at a recent meeting of the House of Councillors Committee on Financial Affairs, the finance minister said it would be difficult to persuade Japanese people to convert their cash savings to digital assets.
The Finance Minister said: “Out of 1,900 trillion yen ($17.6 billion) financial assets held by households in Japan, around 900 trillion yen ($8.4 billion) is now being held as cash deposits and that is abnormal,”
The minister also addressed the legal definition of digital currency. In terms of the Payment Services Act, introduced in May, “crypto-asset” has replaced all references in law to “virtual currency.”
Mr Taro Aso also suggested another revision that would replace “crypto-asset” with “angō shisan,” the Japanese word for “stablecoin.” “The word ‘crypto’ sounds a bit shady so why don’t we use the Japanese word for stablecoin… Sounds more stable right?” he proposed.
The Payment Services Act also cut the leverage limit for cryptocurrency margin trading from 4x to 2x. JRA member Otokita questioned Japan’s Financial Services Agency (FSA) on lowering of the cap.
The agency said it arrived at the revision after consulting with experts and noting that such a cut was an appropriate response to the volatility of cryptocurrencies.