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Bitcoin and Solar Energy Fuel Investment in Japan: Expert Take

In our Expert Takes, the opinion leaders of the Inside and outside express their opinions, share their experience and give advice. Expert Takes covers everything from Blockchain technology and ICO financing to taxation, regulation, and cryptocurrency adoption by different sectors of the economy.

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The global financial crisis of 2007/2008 has wreaked havoc in the global economy and has resulted in declining consumption wealth, widespread foreclosures, evictions, business bankruptcies, unemployment prolonged and global slowdown in economic activity. But everything related to the crisis was not negative. While the wrong decisions and banking practices were met with a brutal awakening by stopping abruptly, this allowed new ideas to emerge, attract attention, and create new ideas. to be used, especially in Japan, the Land of the Rising Sun.

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Nine years after the launch of Bitcoin, economic, and social implications The politics of the crisis are still felt around the world. On a global scale, Treasury departments continue to face funding gaps without a single solution, and the resulting large increases in public debt have resulted in several sovereign debt crises. The very low interest rates of central banks trying to combat deflation have led investors to rack their heads to find cash returns.

These economic conditions have sparked increased interest in Bitcoin as a class of alternative investment. the correlation with the other classes of assets is practically nil, a perfect diversifier. Japan is currently the largest Bitcoin market with a share of more than 61% of world trade volume and 2.7% of the population owns BTC.

Masayoshi Son, CEO of Softbank Group, Japan's richest citizen. With its large checkbook, Silicon Valley Finance – refers to technological developments as the "disruptive core technologies that build infrastructure for tomorrow." In 2017, Masayoshi Son, backed by investors who give it an average of $ 1 billion dollars per minute, has launched a $ 100 billion technology-based SoftBank Vision Fund in partnership with technology companies Apple, Qualcomm, Foxconn and Sharp. And because the investment in the BTC is considered halal, the investors in the fund also include the Saudi Arabian Public Investment Fund and the Abu Dhabi Mubadala Investment Company. More wealth funds from foreign countries are keen to have access to shares and Initial Coin Offerings (ICO) in technology companies, and are pushing for a second SoftBank Vision Fund, which plans to raise about $ 880 billion

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Masayoshi Son believes that with the improvement of Internet connectivity and the use of solar energy, the global demand for digital assets will continue to grow. As a result, he has made investments in OneWeb, a low-Earth-orbit satellite company, and in solar energy companies around the world.

Bitcoin Trade

Japan has a fierce appetite for crypto-currencies. The first Bitcoin Exchange – Bitcoin Market – was created on February 6, 2010, when the BTC exchanged for $ 0.30. However, the exchange was closed six months later after being scammed. In the process, the Japanese Mount Gox quickly gained importance during the same year but ended four years later after being hacked. This was the biggest burglary of a BTC exchange at the time, which was recently replaced by the $ 530 million hack of an unregistered Coincheck exchange (Japan). Coincheck is not alone, as crypto-related cybercrime is on the rise, as users and exchanges struggle to keep up with hackers and the ever-changing methods they use to steal money and money. # 39; information.

So Saito, Japanese partner law firm So-Law, explains that "the first BTC regulations in Japan were proposed after Mt. Gox Hack, when amending the Banking Law and of the Proceeds of Crime (Money Laundering) Prevention Act, has banned banks and brokerage firms from processing unregistered client accounts, but allowing owner trading on Bitcoin, which came into effect on April 1, 2017 , at the same time as the Payment Services Act recognizing cryptocurrencies as a means of payment, giving them the same legal status as any other currency.For now, the Financial Services Agency (FSA) of Japan has granted licenses for 16 cryptocurrency exchanges. "

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After the biggest hacking of history, the FSA stepped up its efforts to investigate Bitcoin trading. money laundering transactions. The FSA also encourages the merger of two business groups – the Japan Blockchain Association and the Japan Cryptocurrency Business Association – to create a general association established under the revised Payment Services Act to create an enforceable regulatory framework. to the cryptographic industry.

This is important because the settlements have allowed SoftBank Investment, Sumitomo Mitsui Banking Corporation, Mizuho Financial Group Inc. and Dai-ichi Life Insurance Company to continue to invest in Bitcoin exchanges to the point of from Japan the best bitcoin exchange. The OIC market in Japan is on fire. Taizo Son, the younger brother of Masayoshi Son and founder and CEO of venture capital firm Mistletoe, predicts that ICOs, who are democratizing the fundraising process, will eventually dominate fundraising start-ups. On October 27, 2017, the FSA issued a statement clarifying its position on ICOs:

"ICOs may fall within the scope of the Payment Services Act and / or instruments

In February, the FSA warned an unregistered foreign agency of the OIC whose activities could cause losses for investors.The Japanese Ministry of Finance has also warned investment firm and a questionable ICO

Cryptocurrency Taxation

When Japan lifted its national tax of 8% on cryptocurrency sales in July 2017, -the dramatic rise in prices But the non-taxable nature of cryptocurrency transactions has proved to be short-lived.On September 6, 2017, the National Tax Agency (Kokuzeichou) declared that the profits generated by cryptocurrencies were submissive s to the personal income tax, except cases related to income-generating activities, such as the operation of digital currency. , or actively trade. Miners can subtract mining overhead costs such as facilities, energy consumption, etc. their final profit.

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The top federal tax rate applicable to individual taxpayers in Japan for 2017 is 39.6% higher than in the United States. Unlike gains on equities and currencies, which are taxed at around 20%, Japan earns 15 to 45% cryptocurrency benefits for investors receiving an annual salary greater than 20,000,000 yen ($ 176,500). and miscellaneous income over ¥ 200,000). In addition, 10% of municipal taxes are added at each income level.

Essentially, during this tax season, all cryptocurrency users will have to adopt meticulous record-keeping and price-tracking measures. United States where cryptocurrency profits will be calculated at the time of conversion to JPY (¥) and reported in annual tax returns due between February 16 and March 15, 2018.

The opinions and interpretations in this article are those of the author and do not necessarily represent the views of Cointelegraph.

Selva Ozelli, Esq., CPA is an international tax lawyer and CPA who often writes on tax, legal and accounting matters for TaxNotes, Bloomberg BNA, other publications and the OECD.