Japan Blockchain Association demands Tax cuts for Crypto

The Japan Blockchain Association (JBA) has issued a statement calling for the government to reduce the tax burden on cryptocurrency transactions and profits. The JBA argues that the current tax system is hindering the development and innovation of the blockchain industry in Japan, and that lower taxes would encourage more people to adopt and use crypto assets.

According to the JBA, the current tax rate for crypto transactions ranges from 15% to 55%, depending on the income bracket of the taxpayer. This means that crypto investors have to pay a higher tax rate than stock or forex traders, who are taxed at a flat rate of 20%. The JBA claims that this is unfair and discourages people from investing in crypto, especially in the long term.

The JBA also points out that the tax reporting process for crypto transactions is complicated and burdensome, as taxpayers have to keep track of every transaction they make, including the price and exchange rate at the time of the transaction. The JBA says that this creates a lot of confusion and errors, and that many taxpayers end up paying more taxes than they should.

The JBA proposes that the government should adopt a simpler and more favorable tax system for crypto transactions, such as:

Applying a flat tax rate of 20% or lower for all crypto transactions, regardless of the income bracket of the taxpayer.

Allowing taxpayers to deduct their losses from their gains, as well as their expenses related to crypto transactions, such as fees and commissions.

Exempting small transactions below a certain threshold from taxation, such as 100,000 yen per year.

Providing clear and consistent guidelines on how to calculate and report taxes for crypto transactions.

The JBA believes that these measures would stimulate the growth and innovation of the blockchain industry in Japan, as well as attract more foreign investors and businesses to the country. The JBA says that Japan has the potential to become a global leader in blockchain technology, but that it needs to create a more conducive environment for crypto adoption and use.

Crypto staking rewards are taxable once received

If you are participating in a crypto staking program, you may be wondering how to report your earnings to the tax authorities. Crypto staking rewards are a form of income that you receive for locking up your coins in a validator node and helping to secure the network. The IRS has not issued any specific guidance on crypto staking rewards, but based on the existing tax principles, they are likely to be treated as ordinary income.

This means that you have to pay taxes on your crypto staking rewards as soon as you receive them, regardless of whether you sell them or not. The taxable amount is the fair market value of the rewards at the time of receipt, which can be determined by using a reputable exchange rate or price index. You should keep track of the date and amount of each reward, as well as the cost basis of the coins you staked.

The tax rate that applies to your crypto staking rewards depends on your marginal tax bracket and how long you hold the rewards before selling them. If you sell them within a year of receiving them, they are subject to short-term capital gains tax, which is the same as your ordinary income tax rate. If you sell them after a year of receiving them, they are subject to long-term capital gains tax, which is usually lower than your ordinary income tax rate.

Crypto staking rewards are a new and evolving area of taxation, and there may be changes or clarifications in the future. It is advisable to consult a tax professional who is familiar with crypto taxation before filing your tax return. You should also keep accurate and detailed records of your crypto staking activities and transactions, as you may need to provide them to the IRS in case of an audit.