Japan Prime Minister Highlights Crypto and Web3 as Key to Economic and Social Growth

Japan Prime Minister Highlights Crypto and Web3 as Key to Economic and Social Growth

Japan Prime Minister Shigeru Ishiba, has underscored the crucial role of cryptocurrency and Web3 in addressing the country’s economic and societal challenges.

According to Japanese media outlet Iolite, Finance Minister Katsunobu Kato has pledged to finalize Japan’s cryptocurrency tax framework by June 2025. This commitment was made in response to concerns raised by Akihisa Shiozaki, the Liberal Democratic Party’s Head of Web3, regarding Japan’s stringent approach to crypto taxation.

Stricter Crypto Taxes Impacting Japan’s Competitiveness

Shiozaki has criticized Japan’s existing crypto tax system, arguing that it is far more restrictive than those of other countries, where governments have prioritized regulatory frameworks that foster innovation in digital finance. He expressed concerns that Japan’s rigid tax policies are hindering its global competitiveness in the crypto sector.

“Japan’s crypto asset tax system is stricter than other countries, which is hindering Japan’s competitiveness,” Shiozaki stated, referencing former U.S. President Donald Trump’s recent proposal to establish a national Bitcoin reserve.

In response, Prime Minister Ishiba acknowledged cryptocurrency’s potential to enhance Japan’s economic productivity and contribute to solving key financial and societal issues. He also stressed the need to protect crypto users and advance the country’s Web3 ecosystem.

“The healthy development of Web3, including crypto assets, is extremely important,” Ishiba stated during a House of Representatives Budget Committee session.

Japan’s Crypto Tax Reform to Be Finalized by Mid-2025

Finance Minister Kato confirmed that regulators are actively discussing Japan’s crypto tax reform for 2025 and are working on the necessary legal adjustments.

“The Financial Services Agency will verify the system regarding crypto assets by June of this year,” Kato announced.

In December 2024, prior to the unveiling of the fiscal 2025 tax reform outline, the Liberal Democratic Party Policy Research Council approved an urgent proposal advocating for cryptocurrency to be recognized as a national economic asset. The proposal includes provisions for a new tax structure that separates crypto-related gains and losses from miscellaneous income.

Under the current tax framework, crypto earnings in Japan are classified as “miscellaneous income,” subjecting them to tax rates of up to 55%, depending on an individual’s income level. In contrast, in October 2024, the Democratic Party for the People proposed lowering the tax rate to 20%, aligning Japan more closely with global standards.

Reassessing Crypto’s Legal Classification

Beyond tax reforms, Japanese regulators are also considering redefining the legal classification of crypto assets. Currently, crypto is treated primarily as a payment method rather than an investment asset. Minister Kato confirmed that the government is consulting various stakeholders to determine whether a legal reclassification is necessary.

As Japan moves forward with its crypto and Web3 strategy, the decisions made in the coming months could significantly influence the country’s position in the global digital finance landscape.