The Financial Services Agency (FSA) will conduct a comprehensive review of Japan’s crypto laws, possibly seeking to ease regulations and further reduce capital gains taxes. However, unexpected electoral events could impact the process.
The new Liberal Democratic Party (LDP) candidate has made few public statements on crypto, but the industry numbers are disappointing.
A reclassification for crypto
Bloomberg announced this upcoming review on September 30, saying the FSA primarily aims to evaluate Japan’s existing Payment Services Law.
Essentially, the goal of this review is to determine whether crypto should be regulated as a payment option, as it is currently, or as an investment tool. An anonymous official claimed that Japan primarily uses cryptography for the latter purpose, which could change the entire legal paradigm.
Japanese cryptocurrency trading has been recovering throughout 2024, and a number of specific measures could help boost it further. Obviously, the most attractive change possible is a reduction in tax on crypto gains, from 55% to 20%, similar to stocks. The FSA also spoke of increased consumer protections and business leaders called for looser restrictions.
Read more: Crypto regulations: what are the advantages and disadvantages?
The demands of business leaders could prove particularly important in the FSA’s findings. Large companies like Japan’s largest bank have already been working on a stablecoin since 2023, but they are not the only ones.
This year, electronics conglomerate Sony made headlines by acquiring a stock market. If Japan’s biggest companies support relaxed measures, the FSA might listen.
Japan’s electoral upheaval
A notable complication in the FSA investigation is Japan’s upcoming election. Prime Minister Fumio Kishida is unable to run again and his constituency has made an unexpected choice for his successor: Shigeru Ishiba.
Although Ishiba has expressed support for continuing previous economic policies, his selection follows a series of significant disagreements with his party, the LDP.
“If crypto had a vote, we would want Takaichi. She wants to pursue ‘Abenomics,’ which means more money printing and tolerance of a weak yen,” said prominent crypto entrepreneur Arthur Hayes.
One of Ishiba’s first public statements as Kishida’s chosen successor was to declare early elections. As LDP chairman and presumptive new prime minister, Ishiba will dissolve the lower house of parliament and hold elections on October 27. Kishida has been a valuable ally of Web3, but Ishiba has made few public statements about his own crypto policy.
Bloomberg cited an FSA official who said there were no clear conclusions about how long the investigation would take. However, he said it would likely last through the winter. In other words, this will certainly continue when the elections are held, and Japanese stock markets have already faltered since Ishiba became the new party leader.
Read more: Top 9 Crypto-friendly Countries for Digital Asset Investors
This FSA study offers huge possibilities, but a bullish future for crypto is not guaranteed. If Ishiba loses or abandons his predecessor’s pro-crypto policies, some regulatory friendliness opportunities could be wasted. Yet, for now, the FSA study has only just begun and it is premature to make too many concrete predictions.
Disclaimer
In accordance with the Trust Project guidelines, BeInCrypto is committed to providing unbiased and transparent reporting. This news article aims to provide accurate and current information. Readers are, however, advised to independently verify the facts and seek professional advice before making any decision based on this content. Please note that our Terms and Conditions, Privacy Policy and Disclaimer have been updated.
