On June 20, Japan’s National Tax Agency published a partial revision of its corporate tax guidelines. They include a new set of rules for digital token issuers that remove previous taxes on unrealized profits from crypto assets issued by companies.

The new tax rules would “make it easier for cryptocurrency-related companies to do business in Japan,” said industry analyst Colin Wu.

Japan Eases Corporate Crypto Taxes

The latest tax break follows the approval of a proposal to remove the requirement that crypto companies pay taxes on unrealized “paper profits” on the tokens they issued and held.

Japanese fintech companies that issue tokens will be exempt from paying a flat 30% corporate tax rate on their holdings.

Currently, the laws impose taxes on unrealized profits, which caused some companies to move abroad to friendlier jurisdictions.

While there are still issues to be addressed to make it easier for cryptocurrency companies to do business in Japan, “this represents a step forward in improving the business environment,” local media reported.

There are two main conditions for crypto token tax exemptions. Tokens must be issued by the company and continuously held from the time of issuance, and transfer restrictions must be in place.

The crypto community has reacted positively to the latest government move. Sota Watanabe, founder of Astar Network (ASTR), who has advocated for this tax review, commented:

“At the moment, people who want to do something like Astar can now do it without leaving the country. I would like to continue constructive discussions with politicians and authorities.”

He added that he wants to review the taxation of having tokens issued by other companies “since it is an obstacle to the national expansion of the projects.”

Japan has been enforcing stricter AML (anti-money laundering) rules since early June in an effort to align with the Financial Action Task Force (FATF) requirements.

Pivot to Asia Continued

Japan was one of the first countries to fully legalize and regulate cryptocurrency, which is why it remains a popular destination for businesses. Earlier this month, reports surfaced that its largest bank could become a stablecoin issuer.

However, Hong Kong and Singapore have emerged as more crypto-friendly nations this year with their own regulations and digital welcome mats.

Meanwhile, the United States continues to crack down on the industry, taking legal action against companies for failing to do the impossible: register as stock exchanges.

Cryptocurrencies in Japan

The cryptocurrency sector in Japan has undergone significant changes lately. Since June 1, the country is enforcing stricter anti-money laundering (AML) measures to track cryptocurrency transactions and align the Japanese legal framework with global cryptocurrency regulations.

Lawmakers revised the anti-money laundering legislation in December after the Financial Action Task Force (FATF) deemed it insufficient.

In June last year, the government passed a law that prohibits the issuance of stablecoins by non-bank institutions. The law, which came into force just a few weeks ago, stipulates that stablecoin issuance in the country is limited to licensed banks, registered money transfer agents, and trust companies.

Japan was one of the first countries to legalize cryptocurrencies as a form of private asset, and its cryptocurrency regulations are among the strictest in the world. Following the Mt.Gox and Coincheck hack, the Japanese financial regulator tightened rules on cryptocurrency exchanges.

Local regulations are believed to have made it easier for FTX users in Japan to quickly return assets following the global collapse of the exchange, in contrast to users in other countries without a clear deadline for their refunds.

By Marina Meza

This past week, Bitcoin Whales maintained a currency trading volume of over 450,000 bitcoins.

Cryptocurrency whales are individuals or organizations that hold a large amount of currency or a collection of non-fungible tokens.

This week, the large Bitcoin holders, or whales, kept roughly the same trading volume shown in the previous week’s report. However, the magnitude of movements in the different directions experienced an important variation.

This week, the price of the major digital currency reached 12-month highs and whales may be on the lookout for profit-taking. It all depends on what the behavior of the price is during the next days. The truth of the matter is that, during this week just ended, the whales sent more coins to the centralized exchanges (CEX).

This analysis includes only individual transactions of 400 BTC or more, according to the data provided by Whale Alert and WhaleBot Alerts, and is interpreted based on the classic method of tracking whales. All data is public and can be verified on the network.

Bitcoin Whales with Relatively Even Movements

Although the Bitcoin whales roughly preserved the trading volume from the previous week, the same was not true of the distribution. The number of bitcoins moved to CEXs was overwhelmingly higher than coins sent to accumulation wallets.

However, there is an element that cannot be overlooked. On Monday, an unknown address sent a staggering 115,177 bitcoins to Binance. That transaction completely upset what would have been close to 50-50 ratio between shipments to unknown wallets and to CEXs.

Be that as it may, that huge transaction counts and increases the percentage of movements towards the exchanges, that is, towards the possible sale. It should not be forgotten that shipments to the CEX are not necessarily currencies that will be settled. A part of them goes to the financial options offered by these platforms.

Therefore, the week closed with good news, at least for Binance. As for the Bitcoin whales, broadly speaking, they held the trade amount from last week. For much of the year, weekly volume rarely exceeded the total of 300,000 coins. Now, for two consecutive weeks, it is above 450,000.

This is How It Was Traded This Week

Last week there were several individual transactions of 400+ BTC from wallets of one exchange to another. Additionally, there were larger movements between unknown portfolios than usual.

In any case, a total of 451,903 bitcoins moved during the week, of which 294,234 BTC were sent to CEXs, mainly Binance. This figure represents a bulky 65.11% of the total, which contrasts with the 57.52% of the immediately previous week.

On the other hand, the coins directed to the unknown or accumulation portfolios totaled 142,552 bitcoins. This is equivalent to 31.54%, which pales in comparison to the 41.04% of the previous week.

Meanwhile, shipments between CEX’s own portfolios marked 2.97% or 13,417 bitcoins. Movements between unknown wallets totaled 1,700 BTC, which is equivalent to 0.38% of the weekly total. These last two fields are of little relevance when it comes to influencing the price of BTC.

With this in perspective, it can be said that Bitcoin whales seem more willing to trade, which would be a sign that the market is in an uptrend.

By Audy Castaneda

Fabio Panetta, official of the European Central Bank (ECB), also warned about volatility.

The European Union (EU) recently established a clear regulatory framework for digital assets, (MiCA). However, not everyone is convinced. One of them is a member of the ECB board of directors, Fabio Panetta, who once again expressed his rejection of cryptocurrencies.

Panetta claims that virtual currencies such as Bitcoin have a unique utility as a means of gambling. He further warns that regulations are overvaluing this sector.

To his criticisms he added the classic theories about the contamination of the digital mining industry and volatility. Although the latter is a fact, there are doubts that these assets are volatile by nature, or that this is due to the lack of maturity that being in its infancy implies.

The Reasons for Panetta’s Rejection of Cryptocurrencies

As already mentioned, volatility is one of the main backgrounds of the official’s rejection of the cryptocurrency sector. But there are others that he recently highlighted. Such is the case of one of the characteristics of the blockchain, which makes it impossible to reverse transactions.

For him, the future of digital currencies and their investors is more than problematic. In his opinion, these assets will end up as gambling chips once the market realizes that most of the characteristics with which they are sold do not exist.

Writing for the Bank for International Settlements Annual Conference on Friday, the official pointed at some “misperceptions.” For example, he said that the vision of virtual currencies as stores of value was belied by the facts. In 2021 and 2022, the crypto market suffered waves of strong volatility, with some coins losing up to 90% of their value. This is something that is not at all what investors are looking for in a reserve asset, he hinted.

The official believes that the “implied in nature” high volatility of virtual currencies should lead to them being treated as gambling. In his opinion, legislators around the world should see them that way. Therefore, Panetta’s rejection of cryptocurrencies does not depart from the standard discourse of detractors of that industry.

A Harmful Form of Innovation

Panetta considers that cryptocurrencies, despite being considered as innovative, are not robust; hence the need for regulators to take the necessary measures to avoid further damage.

He warned regulators to be careful about supporting an industry that has so far “produced no social benefits.” In addition, he said that these assets are increasingly trying to integrate with the traditional system to take advantage of it. On the other hand, he stressed that the decentralization, scalability and security of digital currencies “are not achievable.”

Panetta’s rejection of cryptocurrencies extends to its underlying technology, the blockchain. In this sense, he stressed that the immutability of the blockchain is a negative aspect of the space, since transactions are reversible.

Despite Panetta’s vehemence in his opinion, many of the official’s arguments against cryptocurrencies are debatable, considering, for example, the Juicy Fields case, which demonstrated the uselessness of the traditional banking system in reversing transactions.

On the other hand, Panetta’s argument that cryptocurrencies “have not produced social benefit” is contradicted in the case of underdeveloped countries, where financial weakness and the instability of local currencies can be addressed through the use of digital currencies.

By Marina Meza