Japan Blockchain Association Pushes for Cryptocurrency Tax Reforms


On July 28th, 2023, the Japan Blockchain Association (JBA) submitted a proposal for cryptocurrency tax reform to the government. The JBA, led by bitFlyer Representative Director Yuji Kano, is advocating for a review of the current tax system, which they argue is impeding the growth of Web3 businesses in Japan. They are calling for a more favorable environment for citizens to hold and use cryptocurrencies.

The proposal includes three requests:

1. Abolish the year-end unrealized gain tax on tokens issued by third parties. In June 2023, Japan’s National Tax Agency revised some corporate tax rules, allowing companies to exempt market value evaluations of cryptocurrencies they issued themselves. However, the year-end unrealized gain tax on tokens issued by third parties is still a major obstacle for domestic companies entering new Web3 businesses. The JBA believes that abolishing this tax would significantly reduce barriers to entry into Web3 businesses and prevent token price drops caused by companies selling tokens to pay taxes.

2. Change the taxation method for individual cryptocurrency transactions to separate declaration taxation and set a uniform tax rate of 20%. According to the latest statistics from the Japan Virtual Currency Exchange Association (JVCEA), the number of cryptocurrency trading accounts in Japan is continuing to rise. As of April 2023, about 6.8 million accounts have been opened, surpassing the number of accounts (about 3.61 million) when the tax system for foreign exchange margin trading (FX) changed from comprehensive taxation to separate declaration taxation in June 2011. The JBA’s survey results showed that 43.9% of respondents would like to double their investment if the tax system changes to separate declaration taxation.

3. Abolish income tax on profits each time cryptocurrencies are exchanged. The JBA expects that this will make operations more suitable for Web3 use cases such as DeFi and NFT markets, leading to an improvement in the convenience of cryptocurrencies.

The JBA hopes that by realizing these tax reform requests, Japan will be recognized as a leading Web3 country both domestically and internationally. They believe that the expansion of the new industry, the Web3 economy, will make a considerable contribution to the growth of the Japanese economy, which is facing transformation. They also suggest that the increase in cryptocurrency users, investment amounts, profit realization, and proper declarations could contribute to tax revenue, limiting the impact on tax revenue reduction, and in some cases, could even increase tax revenue.

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