Japan's finance minister sees no need to reduce the crypto tax rate

Japan was one of the first regions around the world to start accepting cryptocurrency. However, the country is currently still forced to fight against increasing tax rates. While many are considering steps that would lead to lowering tax rates, the country's finance minister, Taro Aso, hinted that he is unwilling to assist.

No need to reduce the tax rates

According to Aso, lowering the tax rates on cryptos — which is a goal of recent legislation — t0 a flat 20% is not the right move to make. He justified this stance by saying that it is difficult for many of the country's households to invest in cryptocurrencies.

Aso's statement came in response to a question from Shun Otokita, a member of the Japan Restoration Association. This was during a meeting of the House of Councillors Committee on Financial Affairs earlier today.

Aso stated that "Out of 1900 trillion yen financial assets held by households in Japan, around 900 trillion yen is now being held as cash deposits and that is abnormal."

Aso's reasoning is understandable. After all, Japan still has a major number of cash-based businesses, while individuals like to keep their savings liquid. Since Aso expects that it would be difficult to convince investors in Japan to go for crypto, he also thinks that the tax rate should stay as it is.

Crypto tax rates remain high, while leverage goes down

Of course, this still damages everyone else who uses crypto, as nearly all cryptocurrency-related income is subject to a rate of up to 55%. This includes mining, trading, lending, and more, just because this is classified as miscellaneous income on taxes.

The country's crypto supporters are pushing for legislation that would bring the tax rate down to flat 20%.

Meanwhile, on May 1st, Japan's current legislation on cryptocurrencies came into effect, stating that all references to virtual currency should be replaced with 'crypto asset.' Aso even suggested that the country starts using the Japanese word for stablecoin, because it 'sounds more stable.'

The May 1st legislation also cut the leverage cap for crypto margin trading from 4x to 2x, which is another thing that did not sit right with many of the crypto traders. However, the FSA believed it is necessary in order to prevent major fallouts like the one in mid-March.