Japan to Remove Tax on Unrealized Crypto Gains

The Japanese cabinet has given its approval to a proposal from the ruling Liberal Democratic Party that aims to eliminate taxation on unrealized gains from cryptocurrencies.

This move is expected to foster growth in the country’s Web3 industry. The proposal, pending discussion in Japan’s parliament (Diet), seeks to abolish corporate taxation on the difference between market and book values of crypto assets issued by external entities.

If enacted into law, this decision would rectify the existing disparity in the treatment of third-party issued assets compared to those issued by holders, who currently aren’t taxed on mark-to-market values. The tax has been a hindrance to Web3 businesses in Japan, according to CoinDesk Japan.

Prime Minister Fumio Kishida’s government has been actively considering input from industry associations, such as the Japan Crypto Asset Business Association (JCBA) and Japan Blockchain Association, aiming to formulate policies that encourage the development of the crypto industry—a key aspect of economic reform.

This approach represents a departure from the conventional practice in Japan, where bureaucrats typically play a central role in policy development rather than politicians.