Japan’s Financial Services Agency Plans Crypto Regulation Overhaul
Japan’s Financial Services Agency (FSA) is preparing a major overhaul of the country’s crypto regulatory framework.
According to a report from Asahi Shimbun, the planned regulation will be focused on the 105 cryptocurrencies that are listed on domestic exchanges, including Bitcoin (BTC) and Ethereum (ETH).
The agency aims to submit the legislation in next year’s ordinary parliamentary session, the report said.
Exchanges Will Be Required To Disclose Information About Projects To Regulators
Under the planned regulatory framework, exchange platforms will be required to disclose core facts about each crypto asset. Detailed information including whether the asset has an identifiable issuer, the blockchain technology underpinning the project, and the asset’s volatility profile will have to be disclosed, according to the report.
Along with disclosing each asset’s details, the FSA is also trying to curb insider trading in the local market. Under the bill, individuals or entities with access to information that is not available to the public, such as listings, delistings, or bankruptcies, will be prohibited from trading or selling tokens that the information relates to.
Flat 20% Tax On Crypto Gains Being Weighed
In an effort to attract crypto trading activity back to local markets, the FSA is also considering implementing a flat 20% tax on crypto gains.
Currently, crypto earnings are taxed as “miscellaneous income.” As a result, high-earning traders can face tax rates as high as 55%, which is one of the steepest rates in the world.
The planned 20% flat tax on crypto gains is inline with the current flat tax rate that applies to profits generated from trading stocks in Japan.
Japan Considering Letting Banks Hold Bitcoin
The recent news around the FSA’s crypto regulatory framework overhaul follows reports last month that the agency was considering allowing banks to acquire cryptos such as Bitcoin for investment purposes.
Banks in Japan are currently barred from holding digital assets due to concerns around their volatility. However, the FSA might revisit the restrictions at an upcoming meeting of the Financial Services Council.
The FSA is also reportedly exploring whether bank groups should be allowed to register as licensed crypto exchanges. This would let banks offer crypto trading and custody services directly to customers.
JPX Also Planning On Imposing Stricter Rules On Publicly-Traded Crypto Companies
While the FSA is reportedly opening up to digital assets, Tokyo Stock Exchange parent Japan Exchange Group (JPX) is considering imposing stricter rules on publicly-traded companies that want to make a crypto treasury pivot.
Among the specific measures being discussed is stronger enforcement on back-door listing rules, which allow firms to get listed by merging or acquiring a company that is already listed.
Another one of the measures is requiring companies to undergo fresh audits if they make a crypto pivot.
That’s in response to the steep drop in share prices for digital asset treasury (DAT) firms. Japan-based Metaplanet, for instance, has seen its share price plunge over 43% in the past six months.
Metaplanet share price (Source: Google Finance)
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