Big Win for Crypto Companies: Japan Slashes Taxes on Digital Tokens

Companies in Japan that issue digital currency tokens have been given a tax break. A new law from the National Tax Agency, passed on June 20, means they no longer need to pay corporate tax on profits they haven't actually made yet from these tokens.

This new rule comes half a year after the Japanese government approved a plan to stop taxing such "paper" profits. The law is part of wider tax reforms discussed since last August, and now firms won't have to pay the usual 30% tax on profits from tokens they hold.

The Liberal Democratic Party, which currently rules, thinks that the change will make it easier for companies to do business involving tokens.

There have been many changes in Japan's cryptocurrency industry recently. From June 1, stricter rules have been in place to prevent money laundering through cryptocurrency transactions. These changes bring Japan in line with global rules. This came after a review in December found that the previous laws weren't good enough.

Last June, a law was passed stopping companies that aren't banks from issuing stablecoins - a type of digital currency. Now only licensed banks, money transfer companies, and trust companies can issue stablecoins in Japan.

Japan was one of the first countries to allow cryptocurrency and its rules are some of the strictest. After two large hacks, rules on cryptocurrency exchanges were tightened. Some believe these rules helped customers of FTX, a failed exchange, get their money back quickly, unlike in countries with less clear rules.