The Japanese government is planning to review tax rules for crypto startups from 2023 and consider taxing crypto companies only when they generate profits from sales. The move is aimed at nurturing local crypto startups and encouraging them to operate inside the country.
Japan to Foster Crypto Startups With New Tax Rules
Japan’s Financial Services Agency (FSA) and the Ministry of Economy, Trade, and Industry (METI) are looking to review taxation rules for crypto companies from 2023 to stimulate crypto startups. More specifically, the government is planning to review how to tax companies that use crypto to nurture startups.
According to the regulators, Japan is considering implementing a new taxation framework that would impose taxes on businesses that own crypto after they turn a profit. The new system aims to encourage crypto-related firms to conduct business in Japan and stimulate their growth.
Many crypto startups prefer to establish their businesses in Singapore and United Arab Emirates (UAE) due to more crypto-friendly regulations. Singapore is one of the first countries to adopt blockchain technology, though even the island country said earlier this year that it plans to tighten crypto regulations following the collapse of Three Arrows Capital (3AC).
Japan Allows Trust Banks to Manage Crypto
Japan’s decision to review tax rules for crypto comes just several weeks after FSA announced plans to allow trust banks to manage cryptocurrencies later this year. According to Nikkei, the FSA’s plan to deregulate local trust banks was aimed at boosting crypto adoption and improving investor protection.
The move would allow trust banks to handle “volatile” and high-risk crypto assets, the FSA added. The new legislation is expected to come into effect this Autumn, the regulator said.
Japan was also among the first companies to impose new regulations on stablecoins following the collapse of TerraUSD (UST) and its sister token LUNA. Among other things, the new regulations will allow licensed banks and registered financial institutions in the country to issue stablecoins from next year.
At the moment, there are 13 registered trust banks in Japan, including SMBC, Sumitomo Mitsui, Nomura Trust and Banking, Mitsubishi UFJ Trust and Banking Corporation, and others. SMBC partnered with a blockchain firm HashPort last month to develop a “token business lab” and collaborate on non-fungible token (NFT) and Web3 projects. The partnership came just a few months after the country’s biggest bank, MUFG, teamed up with Animoca Brands to accelerate “the development of the NFT market.”
This article originally appeared on The Tokenist
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