Japanese Financial Services Agency Submits Tax Reform Proposal,Calls for Review on Taxation of End-of-year Market Valuation of Crypto Assets Held by Third Parties

The Financial Services Agency of Japan (FSA) submits crypto assets as a key request in the tax reform proposals for the year 2024 submitted to the government, specifically calling for a review on the taxation of the end-of-year market valuation of crypto assets held by third parties. The FSA mentioned that currently, crypto assets held by domestic companies are valued at market price at the end of the period for tax purposes, and taxes are levied on valuation gains and losses (unrealized gains and losses with no cash flow). In a bid to foster an environment promoting Web3 and encouraging entrepreneurship through the use of blockchain technology, the end-of-year market valuation taxation will apply to legal entities (third parties other than the issuers) who continuously hold relevant crypto assets.