According to Bloomberg, anonymous officials from the “Japan Financial Services Agency” (FSA) expressed that the popular Asian country is willing to review and modify its rules for the Cryptocurrency sector.
The review will take place in the coming months and will assess whether the nation’s approach to regulating cryptocurrencies under the payments law is effective or not. Furthermore, the review could also pave the way for domestic funds to invest in digital tokens.
Likewise, Japan’s regulator is analyzing whether its current cryptocurrency rules offer sufficient protection to investors.
‘The FSA will examine whether the law offers adequate protection to investors. This is because the tokens are mainly used for investing instead of making payments,” the official said. “That could lead to changes in the law or the reclassification of cryptocurrencies as financial instruments that fall under Japan’s investment law,” he added.
Additionally, officials noted that the review could also conclude that the law itself needs changes or that cryptocurrencies should be reclassified as a financial instrument and made subject to the country’s investment law. This could pave the way for reducing taxes on digital assets, something the country has already been exploring.
“With regard to the tax treatment of transactions with digital assets, it is necessary to consider whether cryptoassets should be treated as financial assets that should be the subject of investment for the public.” The FSA expressed in August.
It should be noted that by evaluating the effectiveness of the current law and considering changes that protect investors, Japan demonstrates its commitment to a transparent and secure, efficient crypto market.
Blockchain“>Sony, Mitsubishi UFJ Financial Group and other large Japanese companies are betting on Blockchain technology
It is important to note that nations around the world have been seeking to clarify their legal approach towards cryptocurrencies.
For reference, during 2023, the United Kingdom decided to make cryptocurrencies a regulated activity, subjecting the sector to its financial services regulations. In addition, Europe also developed tailored regulations for the crypto sector, known as the “Regulation of Cryptoasset Markets” (MiCA).
“The reclassification of cryptocurrencies through the Financial Instruments and Exchange Act would strengthen investor safeguards and usher in other dramatic changes.” Said Yuya Hasegawa, a market analyst at the Japanese cryptocurrency exchange “Bitbank.”
On the other hand, in June 2023, the FSA also announced that Japanese cryptocurrency issuers would not pay taxes on unrealized gains.
“Developing new rules could boost the industry’s effort to persuade officials to reduce the tax on cryptocurrency profits from the current 55% to 20%, in line with other assets such as stocks,” Hasegawa said. “Removing the ban on the launch of exchange-traded funds containing tokens would also become an important step,” he added.
It should be noted that currently, Japanese companies, such as “Sony”, are trying to take advantage of Blockchain technology. In addition, the country’s largest bank, “Mitsubishi UFJ Financial”, is also studying the possibility of issuing Stablecoins under the laws that will be implemented.
On the other hand, trading activity on Japanese cryptocurrency exchanges has begun to recover this year, driven by an overall crypto market rally. Additionally, average monthly volumes on Japanese centralized exchanges are also approaching $10 billion, up from $6.2 billion in 2023.
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