LEGAL REGULATION OF OPERATIONS WITH CRYPTOCURRENCIES IN JAPAN
Japan is the World leader in innovations. Therefore, there is nothing surprising in that the legal regulation of operations with cryptocurrencies in Japan is not prohibited by the legislation of the country.
There is a Commission on Digital Assets of Japan, and there is also a special law on the regulation of exchanges. In this country, digital money is taxed in accordance with the standard rules of the country.
The first steps in regulating the circulation of digital money in Japan began in February 2014 after the collapse of the large stock exchange MtGox. The reaction of the Liberal Democratic Party did not wait – an official statement about taxation, operations with the cryptocurrency and legal status of the Bitcoins was soon published.
In the summer, the Commission on Digital Assets of Japan was created, whose duties included protecting the interests of the cryptocurrency business. This is not a state organization, but a self-controlled body. Nevertheless, the authorities support the Commission.
In June 2015, the government began to explore the possibility of adopting new methods to counteract the legalization of illegal proceeds, the financing of terrorism and other illegal activities that can be carried out using cryptocurrency.
At the end of 2015, it became known that the Financial System Council had set up a working group that drafted proposals for the regulation of digital money. It was suggested that the relevant exchanges be registered with the Financial Services Agency.
In February 2016, information appeared that it was planned to introduce changes in the legislation that would allow us to regard digital money as a currency. It was assumed that such changes would give an opportunity to invest in the crypto currency and affect the rules of the stock exchanges.
In May, the relevant bill was adopted, but digital money was not equated to currency, but to assets. Thus, the cryptocurrency has become a means of not payments, but exchange.
Since that moment, the activity of the cryptocurrency organizations in Japan has increased, and one of the major Japanese banks is developing its own crypto currency.
Based on 11 regulatory legal acts, the Liberal Democratic Party stated that the cryptocurrency is not a security or any kind of currency. Japanese banks can not open accounts in Bitcoin or be intermediaries in dealing with digital money.
The first manual, issued by the Commission on Digital Assets of Japan, recommended that you contact the Commission when creating trading platforms and exchanges working with cryptocurrency. In addition, the guide referred to the adoption of measures to prevent the legalization of funds obtained in this way from illegal activities.
Also it was a question of user safety. Another recommendation was the use of the “Know Your Customer” policy.
In May 2016, a new law was adopted that:
- required mandatory registration of exchanges in the Financial Services Agency;
- allowed the regulator to make checks and even apply administrative measures to the exchanges;
- recognized the value of the cryptocurrency, equivalent to assets, but the digital currency is not regarded as a means of payment;
- classified digital money as a means of exchange, through which it is possible to purchase goods and services.
Proceeding from the statement of the Liberal Democratic Party, the cryptocurrency and related operations are taxed according to the standard rules of the state.
Thus, income tax is imposed on the income of an individual, and legal entities pay taxes on profits. In addition, sales of digital money are subject to a value-added tax.
Legal regulation of operations with cryptocurrencies in Japan is a complex process that requires the help of legal experts. Contact Eternity Law International to get qualified help from professional lawyers.