Mitsubishi UFJ Trust and Banking Corporation, one of Japan’s largest banks, has announced a new technical partnership with blockchain firms Datachain and Soramitsu. The goal of the partnership is to facilitate smooth mutual transfers and exchanges between various stablecoins scheduled to be issued in Japan.

The partnership will utilize various stablecoins issued using the stablecoin issuance and management platform “Progmat Coin” led by Mitsubishi UFJ Trust and Banking, as well as the open-source blockchain platform Hyperledger Iroha, which Soramitsu contributes to development. Demonstrations will be conducted assuming regional digital currencies that are being considered by regional banks.

@azcoinnews

Japan became the first country in the world to define stablecoins as “electronic payment methods” under the revised Payment Services Act in 2022, with the bill set to be enforced in 2023. This initiative will help to facilitate smooth mutual transfers and exchanges between the wide variety of stablecoins and regional digital currencies that are scheduled to be issued by various banks in the future.

The partnership will also explore ways to improve the efficiency of cross-border remittances and reduce fees through mutual transfers and exchanges with overseas CBDCs.

In order to realize mutual transfers of multiple stablecoins and digital money on different blockchains such as Corda and Hyperledger Iroha, the partnership will leverage technologies to interconnect both blockchains and execute transactions on both blockchains simultaneously. These connections will include “YUI,” a blockchain interoperability project led by Datachain in research and development, “IBC,” a messaging protocol adopted by YUI, and middleware such as “LCP” that enables interoperability.

Stablecoins have the potential to revolutionize international remittances, micropayments, and the settlement of digital assets such as securities and NFTs. By connecting different blockchains in a safe and practical way, this partnership aims to build advanced use cases for stablecoins and create a financial infrastructure that can be used globally.

#Mitsubishi #Japan #Stablecoins #azcoinnews #NFT

This article was republished from azcoinnews.com

#Japan  has made headlines when it comes to #Blockchain adoption due to its proactive rules and regulations. Many people believe these guidelines are quite strict for international companies. However, this narrative is quite wrong. 

#NFTStudio24  met Cofounder/CEO of Reality Plus Morten Rongaard who shared his experience in the Japanese market “I can see here the companies are very open-minded to Web3 more than I assumed.” 

During his meetings, he was impressed to see how the local companies here highly focus on working together to move forward mutually. 

https://youtu.be/WJJTIbWn20s

Web3 is a vast industry

Web3 is a vast industry that covers all aspects of blockchain technology. Rongaard calls Japan the “Master of Gamification.” He says this gamification exists not only in games but in different aspects such as products as well. 

He notices inclusivity which is a fundamental aspect of the Web3 world that drives the community. It doesn’t matter where you come from, what your race or identity is, or what color you are – everyone is welcome to participate and contribute. In fact, many Web3 companies actively strive to create a more inclusive environment, not just in terms of their workforce but also in their products and services. 

Ultimately, it is this open-minded and diverse community that drives the success of the #Web3 industry.

NFTStudio24, along with many other companies, is bringing inclusivity by overcoming the language and country barriers to bring the international market within Japan and vice versa. 

By helping local companies expand into the global market and introducing international businesses to the #Japanese  market, NFTStudio24 is playing a crucial role in the growth and development of the Web3 industry in Japan.

Compared to that, other countries have been preventing or delaying the guidelines causing many hurdles for startups, exchanges, projects, and companies. Despite the growing public interest in Web3, many governments are avoiding the topic of discussion, hindering the progress of the industry in those countries. However, Japan’s proactivity in creating a conducive environment for Web3 is setting the standard for other countries to follow.

Are you a Japanese Crypto Investor struggling with crypto taxes? Don’t worry you’re not alone. A majority of crypto investors in Japan struggle with crypto taxes given the complexity of the guidelines governing the taxation of such assets and the inherent complexity of crypto as an asset. Japan is among the strictest nations in the world when it comes to crypto taxes having one of the highest tax rates on crypto transactions which may go up to 55% in some instances. 
We realise that navigating crypto taxes can be an intimidating task for most investors, that’s why we have curated a detailed tax guide covering all the aspects of crypto taxation in Japan. In this guide, we will cover everything from crypto gains and income to DeFi and NFT taxes. We will also answer pivotal questions like “How is crypto taxed in Japan?”, “How to file crypto taxes?”, “Can the tax authority track crypto?”, “How to calculate crypto gains and losses?” and more. 
So let’s hop in.
How is Crypto Taxed in Japan

The Japanese National Tax Authority views crypto as property and any gains incurred from their sale attract income tax. Moreover, crypto received through airdrops, staking, and mining is also subject to income tax. So if the total gain or income from crypto assets exceeds 2,00,000 JPY in a tax year, you need to report your gains/income to the NTA and pay taxes on them in compliance with the Payment Services Act (PSA) and the Financial Instruments and Exchanges Act (FIEA). You can access the detailed guidelines here.
Any income/gain reported by an individual or business is categorized as “Miscellaneous Income” and the tax rates may go up to 55%, that’s pretty steep because gains from securities are taxed at a flat rate of 20% in Japan. 
Japan has a progressive tax on miscellaneous income, ranging from 5% to 45% on profits. Moreover, Japanese taxpayers are obligated to pay an inhabitant tax of 10% on their profits, which includes a prefectural rate of 4% and a municipal rate of 6%. Consequently, the effective crypto tax rate varies between 15% and 55%. For non-permanent residents of Japan, a flat 20% tax applies to all income earned within the country.
How to Calculate Crypto Gains and Losses
Even though there is no capital gains tax in Japan, you still need to calculate the gains incurred from disposing of crypto assets to be able to report them alongside your income and pay taxes on them.
Calculating crypto gains is a pretty straightforward process. All you need to do is to deduct your cost basis from the disposal amount. You can use the following formula to calculate your capital gains:
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However, most investors find cost basis intimidating as a concept. The cost basis is simply the amount your pay to acquire a particular asset inclusive of any additional fees paid in the process. 
Here’s an example:
Let’s say Toshiro san acquired 1 $ETH for 2,00,000 JPY
And he paid 2,500 JPY in transaction fees in the process.
Then the cost basis would simply be (2,00,000 + 2,500) JPY 
Let’s say Toshiro san finally decides to dispose of the #Ethereum(ETH) token for 2,50,000 JPY
In that case,
Capital Gain/Loss = Disposal Amount - Cost Basis = 2,50,000 - 2,02,500 = 47,500 JPY
derstanding of how lost or stolen crypto is treated by the tax authorities.
Crypto Tax Breaks Japan
The way Japan taxes crypto transactions, there’s not much you can do to lower your tax bill. As mentioned earlier, you cannot offset your losses against gains in Japan and beyond there’s barely any way to lower your taxes strategically.
One thing you can consciously decide to do is to dispose of your assets in a low-income year to keep the overall gains under 200,000 JPY, which is the regular income tax exemption limit in Japan. Japan also has an employment income deduction that allows employees from a corporate background to deduct a certain amount from their taxable income. Given below are the income brackets and the deductions allowed in each bracket.
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Although it’s not clear whether these deductions are permissible for income from crypto transactions. We suggest seeking guidance from an experienced tax professional to gain clarity on the subject.
Crypto Cost Basis Method Japan
Japan allows two accounting methods, the total average accounting method and the moving average accounting method or the ACB (Average Cost Basis Method). 
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The total average accounting method is what the investors/traders are supposed to use by default. However, if you choose to use the moving average accounting method, make sure you use it for all your cost-basis calculations to avoid discrepancies in your tax report. 
The moving average method also known as the Average Cost Base (ACB) method, assumes the average cost of the assets of the same kind you currently possess as the cost basis for a subsequent disposal. The total average method is quite similar with just one exception, it considers the average cost of all the assets (of a particular kind let’s say ETH) that you’ve bought in a financial year. 
In simpler terms, the cost basis might change for every disposal depending upon the disposal. However, when you use the total average accounting method, you have a constant cost basis regardless of time, place, or the sequence of your disposal. 
Here’s an example to understand how the Moving average accounting method works:
2022/02/21 - Ishida san bought 1 ETH for 2,00,000 JPY
2022/03/17 - Ishida san bought 3 ETH for 1,90,000 JPY each
2022/05/23 - Ishida san sold 1 ETH for 2,10,000 JPY
2022/06/04 - Ishida san bought 2 ETH for 1,70,000 JPY each
2022/08/27 - Ishisa san sold 1 ETH for 2,40,000 JPY
As evident from the above ledger of transactions, Ishida san made two disposals.
Let’s use the Moving Average Accounting Method to calculate the cost basis for both disposals.
Now, before the first disposal was made, ETH tokens were acquired on two separate occasions. So we have to calculate the average acquisition price:
Average Acquisition Price = (1*2,00,000 + 3*1,90,000)/4 = 1,92,500 JPY
So the cost basis now becomes 1,92,500 JPY for the disposal
Capital Gain on the first disposal = Disposal Amount - Cost Basis = 2,10,000 - 1,92,500 JPY = 17,500 JPY
But now since 1 ETH token is disposed, the total number of ETH tokens in possession goes down to three. And on top of that Ishida san bought 2 more ETH tokens at an average price of 1,70,000 JPY each.
So now the average acquisition price changes.
Value of 3 ETH tokens in possession = 1,92,500 * 3 = 5,77,500 JPY
Value of 2 ETH tokens acquired after 1st disposal = 1,70,000 * 2 = 3,40,000 JPY
Average Acquisition Price = (5,77,500 + 3,40,000)/5 = 9,17,500/5 = 1,83,500 JPY
Now the cost basis changes to 1,83,500 JPY
So, for the second disposal
Capital Gain = Disposal Amount - Cost Basis = 2,40,000 - 1,83,500 = 56,500 JPY
Total Gain from both Disposals = 74,000 JPY
Let’s now consider the same ledger of transactions and use the total average method for calculating the capital gains for both disposals.
Using the total average method is a lot simpler as it considers the average cost of all acquisitions made in a financial year divided by the total number of assets.
So, the average acquisition price = (1*2,00,000 + 3*1,90,000 + 2*1,70,000)/6 = 1,85,000 JPY
Which imputes a cost basis of 1,85,000 JPY
Now for the 1st Disposal
Capital Gain = Disposal Amount - Cost Basis = 2,10,000 - 1,85,000 = 25,000 JPY
And for the 2nd Disposal 
Capital Gain = Disposal Amount - Cost Basis = 2,40,000 - 1,85,000 = 55,000 JPY
Total Gain from both disposals = 80,000 JPY
Notice that the capital gain is 6,000 JPY higher when you use the total average accounting method.
Crypto Income Tax Japan
As mentioned earlier, any gains or income from crypto transactions is taxed as miscellaneous income by the NTA. You are viewed to be making miscellaneous income in Japan if you participate in the following transactions:
Disposing of crypto for fiatSwapping one crypto asset for anotherBuying goods or services with cryptoReceiving compensation in crypto Rewards from mining, staking and liquidity poolsRewards from DeFi transactionsConverting NFTs to crypto or fiatArdops or interest income
Any income or gain incurred from such transactions is to be added and reported in your tax return. The tax rate on such income can go up to 55% depending on the nature of transactions and where you reside in Japan. 
Crypto Income Tax Rate
The crypto tax rate in Japan can go up to 45% depending on which tax bracket you fall into. You will also have to pay a local inhabitant tax of 10% on top of the income tax. The following are the income tax rates in Japan:
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How to Calculate Crypto Income
Calculating your crypto income is pretty straightforward. You just need to add the gains/income from all transactions. We’ve discussed in the above sections how you can calculate your gains from crypto transactions, any tokens that you’ve received from airdrops, staking, mining, or liquidity pools shall be perceived as income and you must track the fair market value of the tokens on receipt, to later add it to your gains and report your actual taxable income base.
Tax-Free Crypto Transactions
Following are some tax-free crypto transactions in Crypto:
Buying crypto with fiatTransferring crypto between wallets
Taxed Crypto Transactions
Following are some taxed crypto transactions in Crypto:
Selling crypto for fiatSwapping crypto Staking cryptoMining cryptoLiquidity MiningYield FarmingSpending cryptoReceiving crypto as compensation
When to Report Crypto Taxes in Japan
The Japanese tax year runs from January 1st to December 31st, and you can file your taxes between February 16 and March 15 every year.
How to File Crypto Taxes in Japan
There are two ways you can file your tax return in Japan.
Using Paper FormsUsing NTA’s Online Portal
If you wish to file your crypto taxes using paper forms, you should use Form A to declare your employment and miscellaneous income. However, note that if the miscellaneous income from other sources does not exceed 2,00,000 JPY, you’re not eligible to file a tax return.
Here’s a stepwise tutorial on how you can file your crypto taxes using NTA’s online portal:
The first step is to log in on the NTA’s website using your registered credentials. If you’re not registered with the NTA, you can do that here.Once you’ve done that, navigate the options and go to “Salary” under “Relevant Income”.From here, go to “Miscellaneous Income” Once you do this, you will be asked the following question “Do you wish to receive deductions for your home?”. Answer with a Yes/No and move aheadIn this step, you need to enter your e-tax number or connect your account to the My Number Portal WebsiteNow you need to enter the total miscellaneous income you’ve earned during a tax year and the profit or lossNow select “Crypto” from the drop-down list to specify the categoryNow enter the name of the exchanges you’ve used and their legal addresses
What Records Will the NTA Want
There is no official guidance on crypto record keeping by the NTA. However, it would be prudent to maintain detailed records for all your transactions dating back to at least 3 years to ensure a hassle-free tax filing experience. Following is the list of documents you should maintain:
Date and time of transactionsNature of transactions and intent of the parties involvedA detailed record of FMV of assets received through staking, mining, airdrops, or as compensationWallet addresses that you have private keys toDetails of the type of assets ownedReceipts of purchase and disposals
How to File Crypto Taxes Using Kryptos?
Now that you’re aware of how your crypto transactions are taxed and what forms you need to fill out to complete your tax report, here’s a step-wise breakdown of how Kryptos can make this task easier for you:
Visit Kryptos and sign up using your email or Google/Apple AccountChoose your country, currency, time zone, and accounting method Import all your transactions from wallets and crypto exchangesChoose your preferred report and click on generate report option on the left side of your screen and let Kryptos do all the accounting.Once your Tax report is ready, you can download it in PDF format.
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