Is New PM Shigeru Ishiba the Trump or Harris of Japan's Crypto Industry?

Japan has appointed Shigeru Ishiba as its new prime minister, marking the official end of Fumio Kishida's three-year term, but what does it mean for crypto?

Although members of the same party, Ishiba is expected to usher in a new wave of policies that will directly impact the crypto industry. Known for his conservative stance, Ishiba is likely to raise taxes on income and investments with a preference for increasing spending on defense and tackling deflation.

Ishibust

News of Ishiba's appointment caused Japanese stocks and risk assets to take a hit. Even Bitcoin slipped 4%, despite experiencing a strong weekend. Concerns largely revolved around Ishiba's conservative approach such as previously supporting the Bank of Japan to raise interest rates.

Japan's central bank increased interest rates for the second time this year in July, leading to a loss of billions of dollars in the cryptocurrency market.

With a history of supporting the deployment of Japanese troops abroad, the formation of an Asian NATO, more assertive foreign policies, and strengthening ties with the US military, the markets fear a more conservative and constrained fiscal approach from Ishiba.

Crypto Clarity Like Kamala

However, his actual stance on crypto still remains unclear. Having called a general election on 27 October, Ishiba said, "I believe it is important for the new administration to be judged by the people as soon as possible." Until then, Ishiba's policies should become clearer, for better or worse.

This uncertainty echoes the dilemma crypto voters are facing in the US too. While Donald Trump has crowned himself the Crypto President, VP Kamala Harris's stance is less clear, although she did recently break her silence to suggest that the US should become "dominant in blockchain."

Crypto At the Centre of Presidential Race as Kamala Harris Says US Should Be “Dominant in Blockchain”

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Kishida previously championed Web3 development and regulation, allowing the industry to flourish. Although not quite going to the extremes of Trump, who just today promised to "Make America Great Again, this time with crypto," by promoting World Liberty Financial, Kishida's stance was welcomed by the industry.

FSA for Crypto

According to Bloomberg, Japan is set to review its cryptocurrency rules, which could lead to lower taxes on digital assets.

In the coming months, the Financial Services Agency (FSA) will assess whether the country's current approach to regulating crypto under the payments law is adequately protecting investors, especially as most tokens are used for investment purposes rather than payments.

An anonymous official said that depending on the FSA's findings, laws surrounding crypto could change and could even lead to the reclassification of crypto as financial instruments under the Financial Instruments and Exchange Act.

In turn, this could potentially strengthen investor protection and reduce the tax rate on crypto gains from 55% to 20%, in line with stocks.

Last month, the FSA proposed a significant overhaul of the country's tax code for fiscal year 2025. A key component of this reform is a potential reduction in the tax rate for cryptocurrency assets.

In a recent request submitted to the government, the FSA advocated for treating cryptocurrencies as traditional financial assets, aligning them with publicly traded investments. This move could pave the way for a more favorable tax environment for crypto holders in Japan.

Japan Mulls Lower Crypto Tax Rates in 2025 Overhaul

The country intends to lower taxes on crypto to a flat rate of 20% – in line with taxes that currently apply to traditional assets such as stocks.

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“Regarding the tax treatment of cryptocurrency transactions, cryptocurrency should be treated as a financial asset that should be an investment target for the public,” the FSA said. 

Sony's Web3 Play

Japan's crypto industry has been calling for a more regulation-friendly environment for crypto to operate in but the Mt Gox scandal continues to be a thorn in the industry's side. Nonetheless, the industry is looking to learn from past mistakes.

Even Japan tech industry titans are looking towards the Web3 industry. In August, Sony announced its own public blockchain, Soneium, with the help of Singapore-based Web3 firm Startale Labs.

The new layer-2 network built on Ethereum utilizes optimistic roll-up technology that allows users to transact for cheaper.

‘Soneium’: Sony Unveils Its Own Public Blockchain With Singapore Web3 Firm Startale Labs

Sony owns 90% of the Singapore joint venture with Startale Labs, Sony Block Solution Labs

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Ishiba is far from being the Trump of Japan's crypto but he's not exactly the Harris either. With pressure coming from Japan's Web3 industry as well as activity from the FSA to overhaul crypto regulation, Ishiba would be wise to consider pushing the industry to the forefront of his policies.