Yoshihide Suga has made few public statements on digital currency, but his stance on taxing crypto assets may prove to be the most insightful.
The 71-year-old is set to become the country’s new prime minister after being voted in as the leader of Japan’s Liberal Democratic Party on Sept. 14. The country’s National Diet will vote the next PM in on Wednesday following Shinzo Abe’s announcement in August — where he stated that he was resigning due to health reasons.
Suga served as Chief Cabinet Secretary during the downfall of Japan-based crypto exchange Mt. Gox and the $500 million hack of the Coincheck exchange in 2018. He has differed from Abe in calling tax increases “inevitable” as recently as last week, though he later walked back some of these remarks. The future PM once also stated that Bitcoin (BTC) transactions should be “subject to taxation.”
"As a matter of common sense, if there are transactions and subsequent gains, it is natural for the Ministry of Finance to consider how it can impose taxes," said Suga at a cabinet meeting in 2014.
Any political influence from Suga on modifications to existing tax laws could affect the development of digital assets in Japan.
Crypto profits are currently labeled miscellaneous income and taxed at 55% in the country. In August, the Japan Virtual Currency Exchange Association and the Japan Cryptocurrency Business Association proposed reducing this rate to 20% starting as early as 2021. The proposal noted crypto taxation in the country could be an issue hindering Japan's potential future edge on competing nations.
However, in a statement to Cointelegraph, FXCoin senior strategist Yasuo Matsuda said he thinks that Abe's resignation "will not have a big impact" on the country’s crypto market.
Abe served as Japan’s PM since 2012, during which time the country officially recognized Bitcoin and digital currencies as money and eventually set up a regulatory framework for crypto. After being passed in 2019, the Japanese House of Representatives began to enforce modifications to the country’s Payment Services Act, or PSA, and Financial Instruments and Exchange Act, or FIEA, for registered crypto exchanges in May.
Before resigning, the former prime minister said he wanted to “pay close attention” to emerging technologies like blockchain. At a 2019 budget committee meeting, Abe said that the technology "allows for the development of IT businesses as well as financial fields such as cryptocurrencies, and has great potential for improving convenience and security in various fields.”