by JP Buntinx
Japan is quickly becoming a hotbed for cryptocurrency these days. Not only has Bitcoin been legalized in Japan earlier this year, but there is a plan on the table to drop the sales tax when buying cryptocurrency as well. This goes to show there is a big demand for Bitcoin and other cryptocurrencies in Japan, with interest expected to grow even more over the near future.
Regulation of Bitcoin varies greatly from country to country. Although Japan is very open to cryptocurrency in general, there is one big hurdle to mainstream adoption. Users who live in the region and purchase bitcoin will pay sales tax on every transaction. For buyers, this brings an additional cost to the table, which puts off some potential exchange customers.
To put this into perspective, a Japanese cryptocurrency enthusiast purchasing bitcoin will pay 8 percent in sales tax. Keeping in mind how this percentile is based on the transaction amount, the numbers could add up quickly. Moreover, this is not the only fee charged for such a transaction, as they may be bank fees, exchange platform commission, and maker-taker fees to take into consideration.
But the situation will be coming to a change, according to the latest news. Nikkei reports how there is a plan on the table to end sales-tax collection on Bitcoin purchases. This move is expected to be formalized in the Spring of 2017, albeit no specific date has been set yet. Assuming this decision will be made official by that time, such a change would propel Bitcoin adoption to unprecedented heights in Japan.
This news is also positive for any entrepreneur or organizations operating a cryptocurrency exchange. They would no longer be required to keep thorough administration for every purchase subject to sales tax. However, it is still a bit early to grasp the full concept of what this change might entail, as a formal decision is expected by the end of 2016.
It is quite interesting to see Japan take such major strides towards positive Bitcoin regulation. In May of this year, the government officially deemed Bitcoin to be a legitimate currency. Companies such as Coincheck have been working on letting users pay their utility bill with Bitcoin, adding real-life use cases for the popular cryptocurrency.
With roughly 2,500 stores in Japan accepting bitcoin as a valid payment method, there is a strong uptake in cryptocurrency payments already. Compared to the same period in 2015, that number has more than quadrupled. Furthermore, Bitwala plans to enter the Japanese banking market and compete with incumbents, planning an integration of the Yen into their services. When the sales tax is removed from bitcoin purchases, that number may continue to increase exponentially over the coming years.
Japan is leading the charge when it comes to regulating Bitcoin. Rather than trying to make existing laws apply to cryptocurrency, government officials have taken their time to review everything properly. As a result, they are now creating a financial ecosystem where bitcoin is legally accepted and can thrive over the years to come.