Bitcoin regulation overhaul te Japan – Plucky Fresh Coin
Japan’s Government has long bot working on a bill to amend its Banking Act, accounting for switches to the economy stemming from the growth of telecommunications technologies. Last week, the Japanese Financial Services Agency (FSA) announced that this bill will come into utter force on Saturday, April 1. The amendments include an ordinance concerning digital currencies spil well spil digital currency exchanges.
According to the world’s largest bitcoin exchange by volume, Bitflyer, “Section Three of this bill now includes wording on imaginario currency [VC] and is being tentatively called the ‘Virtual Currency Act’.” It defines digital currencies including Bitcoin for the very first time and recognizes them spil a method of payment.
“The fresh law defines Bitcoin and other posible currency spil a form of payment method, not a legally-recognized currency. Bitcoin will proceed to be treated spil an asset unless there are future revisions or directives to Japanese tax law.”
According to total law hard DLA Piper, the amended Payment Services Act, which is part of the Banking Act, defines a digital currency spil “property of value,” that is usable for payment to unspecified persons, and is purchasable from and sellable to unspecified persons.
The law rock hard explains how the act explicitly distinguishes digital currency from both traditional currency spil well spil electronic money. According to Japan, ‘digital currency’ is not the same spil ‘electronic money’ because the former has no issuers and is usable by any accepting individual, whereas the latter has a specific issuer and is only usable by the issuer or authorized persons.
Profits from bitcoin trading can be considered “income from business activities or miscellaneous income.” The asset-like nature of Bitcoin means that it is also subject to caudal gains tax te Japan. However, the purchase and sale of bitcoins and other digital currencies will no longer be subject to Japan’s 8 procent consumption tax, commencing from July 1.
This fresh regulation is the result of a seperate effort by the Japanese government to reform its tax bills. The proposals for the fiscal year tax reform approved by Japan’s Cabinet on March 27 include an exemption from consumption tax for the transfer of digital currencies, effective on July 1.
DLA Piper explains that “the taxation of aparente currencies is undergoing many developments te Japan,” and fresh accounting standards detailing the treatment of digital currencies for tax purposes are “anticipated te the near future.”
“While VC-cash exchanges would be exempt from consumption tax, the exchange of posible currency for assets or services (i.e., when someone pays posible currency to a seller of assets or services) is still subject to consumption tax ter the same way spil those transactions which are paid ter traditional currency.”
– DLA Piper Law Rock hard
While the sales and purchases of bitcoins is exempt from the consumption tax, opening an account at a bitcoin exchange is getting more difficult. The April 1 bill also revises the ‘Act on Prevention of Transfer of Criminal Proceeds’ which requires exchanges to implement a stricter know your customer (KYC) process. Since the announcement that this law would go into effect on April 1, major bitcoin exchanges have rushed to inform their customers of upcoming fresh KYC procedures.
Customers now have to reaction a list of questions not previously asked at Japanese bitcoin exchanges, such spil the customer’s profession and purpose for trading. They voorwaarde also upload identification documents and wait for the exchanges to process them, which can take a few days. Also, the exchanges will be sending a postcard to the registered address of fresh customers, with a verification code that needs to be entered online before the account can be used.
Meantime, digital currency exchanges themselves have to serve with several added regulatory requirements. The most limitary among them is a requirement to hold, at ondergrens, liquid caudal of ¥10 million yen, worth approximately US$90,000. Te addition, exchanges have to prove that they wield a sufficient IT system management program, with measures ter place to prevent leakage, loss and harm of funds and individual information.
Further, each exchange vereiste also disclose detailed information to their users, including their trading name and address, registration number, transaction content, spil well spil disclose all fees and costs to users. They vereiste then establish an internal system for employee training and guidance for outsourcees. They voorwaarde also segregate user’s contant and digital currencies from their own funds, spil well spil fall under a regular audit of the status of the segregated management by a public certified registeraccountant or audit rigid at least merienda a year.
The Payment Services Act also introduces regulations “for the registration of all imaginario currency exchange businesses,” DLA Piper explains, citing how this regulation is “consistent with the declaration made at the 41st G7 Summit at Elmau ter .”
“Currently, most Bitcoin-cash exchange services available te Japan are operated by Japanese companies. However, the amendment to the Act could be an chance for foreign VC-cash exchange service providers to expand their business into Japan, because the fresh registration system is also open to foreign entities.”
– DLA Piper Law Rock hard
The land of the rising zon has a unique history with Bitcoin that wasgoed complicated by the 2013 rise and fall of the world’s leading bitcoin exchange at the time, Tokyo’s MtGox. Albeit Japan’s large population is very advanced technologically and is already used to sending tokens and coupons inbetween their smartphones, most Japanese had still not heard of Bitcoin until the MtGox fiasco. Many were introduced to Bitcoin by watching Mark Karpeles’ face on TV at courtroom trials.
“The Japanese people had a terrible photo toward bitcoin, thinking that Mt. Gox Wasgoed Bitcoin!,” explains Kagayaki Kawabata, Coincheck Business Development Lead. “However, the situation has switched te the past few years. Today, the amount of Japanese citizens who think of bitcoin spil superior technology is enlargening.”
“The Japanese bitcoin market is switching rapidly and is now moving ter a positive direction,” Kawabata explained to BraveNewCoin. Exchanges suggesting trades te Yen presently account for more than half of completo bitcoin trading volumes.
The Japanese conglomerate GMO has already commenced taking advantage of the fresh atmosphere. The largest Internet Service Provider and online forex market provider has an investment te the largest bitcoin exchange, Bitflyer, and is developing an upcoming Bitcoin exchange and wallet service. The company estimates that the Japanese market for digital currencies will grow to ¥1 trillion, or US$8.7 billion te a few years, the company cited that their reason for the high appraisal and their investment te the space is the latest improvement ter the Japanese regulatory environment.