Japan’s DPP Leader Pushes Crypto Tax Overhaul, Web 3 and NFT Growth

Yuichiro Tamaki, leader of Japan's Democratic People's Party (DPP), has proposed crypto tax reform to support the growth of the token economy, including Web3 and NFTs, if he wins the election.

His plan would lower the tax on crypto profits to a separate ad tax of 20% instead of treating them as miscellaneous income.

Proposal to lower crypto tax

According to the campaign document, Tamaki proposed carrying forward losses for three years and tax-free exchanges of one crypto-asset for another.

Other proposals include increasing leverage limits from 2x to 10x and introducing crypto exchange-traded funds (ETFs). The reform plan deals with financial creation at the state level. This includes digitizing the yen and empowering local governments to create their own digital currency. The ultimate goal is to grow regional economies. These steps could lead Japan to a modern financial system.

Currently, crypto investors are taxed up to 55% in various income categories. Therefore, a 20% tax on crypto profits will match the current stock market income tax rate, essentially creating parity between digital assets and traditional financial investments.

Meanwhile, Tamaki said the DPP may explore tax cuts for other financial revenues down the road, but for now it will focus on establishing Japan as a leader in Web3. The DPP leader's translated X post read,

Anyway, for now, we want to make Japan a strong country in the Web 3 business.

Re-evaluating the Crypto Framework

Cryptopotato recently reported that Japan is looking to review the effectiveness of its crypto asset regulations in the coming months, opening the door for crypto ETFs in the country.

The review assesses the current regulatory framework established under the Payment Services Act (PSA), which recognizes cryptocurrencies such as Bitcoin as legal property and requires crypto exchanges to comply with anti-money laundering (AML) and counter-terrorism (CFT) laws. At the same time, the Financial Instruments and Exchange Act (FIEA) regulates crypto derivatives.

Japan's Financial Services Agency (FSA) primarily aims to determine whether these regulations effectively protect investors, as most Japanese users view crypto-assets as investments rather than payment methods.