Japan’s FSA explores crypto law changes as election nears

Japan’s Financial Services Agency (FSA) is reviewing its cryptocurrency regulations with potential plans to ease restrictions and lower capital gains taxes.

The review aims to assess whether crypto should continue to be regulated as a payment option under the current Payment Services Act or reclassified as an investment tool.

The outcome could lead to a significant reduction in the tax rate for crypto gains, from as high as 55% down to 20%, aligning it with stock investments.

The review comes at a time when Japan’s crypto trading is recovering, and many industry leaders are calling for less stringent regulations.

Companies like Sony and Japan’s largest bank have shown growing interest in the crypto space, supporting calls for relaxed measures.

An official from the FSA noted that the review would also focus on increased consumer protection alongside a shift in the regulatory framework.

However, the upcoming national election adds uncertainty to the regulatory landscape.

Prime Minister Fumio Kishida, who has been an advocate for Web3 and crypto-friendly policies, will not seek re-election, and his successor, Shigeru Ishiba, has not made clear statements about his position on cryptocurrency regulation.

With the election scheduled for October 27, the outcome could heavily influence the direction of the FSA’s review.

Industry figures have expressed concerns about the possible implications of a change in leadership.

As Arthur Hayes, a prominent crypto entrepreneur, said, "If crypto had a vote, we would want Takaichi," referring to another political figure known for supporting crypto and economic policies that benefit digital assets.

While the FSA’s study is still in the early stages and expected to continue through the winter, it could reshape Japan’s approach to crypto regulation.

The election’s impact on this process remains to be seen, with market participants closely watching developments as the review progresses.