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7.8 rather enabling environment
Japan is one of the world's centers of the blockchain industry and accumulates about 36% of all cryptocurrency-related businesses. The cryptocurrency market is rapidly developing: bitcoin transactions increased 50 times to reach $4.25 bln in 2016, and in 2017, Japan ranked first in the world by the volume of bitcoin transactions (more than 50% of transactions). Cryptocurrency market development is a major source of economic growth; in 2017, bitcoin rate growth could account for up to 0.3% of Japan's GDP growth. The number of people involved in cryptocurrency trading reaches 3.5 million. Japanese regulators have been interested in cryptocurrency regulation since 2014, after the collapse of the popular exchange Mt. Gox. The government and the ruling Liberal Democratic Party discuss initiatives to determine the legal status and taxation of bitcoin.
GENERAL INDEX VALUE
rather enabling environment
The government also cancels the 8% Japanese Consumption Tax ("JCT"), a value-added tax equivalent, in July 2017. At the same time, the income received from cryptocurrency transactions remains subject to income taxation (from 5% to 45%) and should be declared.
The Financial Services Agency (FSA) and the ruling party put forward initiatives to amend the current monetary legislation and legalize virtual currencies in early 2016. In June 2016, a new version of the Payment Services Act is introduced to the Parliament and approved. The act enters into force on April 1, 2017, which in fact leads to the legalization of cryptocurrencies and introduces a licensing procedure for cryptocurrency exchanges. The act initiates an active process of registration of cryptocurrency exchanges; the number of applications reaches 160 by the beginning of 2018, but only 16 of them are approved...
The Financial Services Agency pursues an active policy aimed at the development of the financial technology sector, particularly by experimenting with the blockchain technology in the "regulatory sandbox" mode, supporting research, and also collaborating with the Japanese Bankers Association (JBA) and blockchain business associations. The Financial Services Agency issued an official alert in October 2017 about the risks of ICOs and token sales, highlighting token price volatility and fraud risks. At the same time, ICOs are not prohibited in Japan and are regulated by either the Payment Services Act or by the Financial Instruments and Exchange Act in case an ICO has characteristics of an investment.