Political parties in Japan are advocating for significant reforms in cryptocurrency tax regulations as the national elections set for October 27 draw near.

Yuichiro Tamaki, head of the Democratic Party for the People, aims to attract crypto-savvy voters by suggesting, "If you think crypto assets should be taxed separately at 20% instead of treated as miscellaneous income, vote for the Democratic Party for the People... There will be no tax when exchanging crypto assets with other crypto assets." This statement was shared on X on October 20.

Tamaki's party, with seven seats in the lower house of Japan's legislature, also champions the establishment of crypto exchange-traded funds and the transition of the yen into digital currency. Their agenda includes introducing ‘digital regional currencies’ to boost local economies.

Currently, Japan's crypto tax system garners criticism from investors, as profits from crypto are taxed as income, reaching as high as 45% for top earners. In contrast, capital gains taxes on securities are set at 20%. Recent reforms lifted the tax on unrealized gains for crypto holders, but active review of the tax framework is still ongoing.

As the elections approach, Shigeru Ishiba of the Liberal Democratic Party seeks to strengthen his influence amidst a campaign funding scandal. The party has also produced a white paper outlining their position on web3 and the necessity of tax reform for cryptocurrencies.

The Constitutional Democratic Party of Japan has voiced intentions to reassess the crypto tax framework, recognizing its importance in fostering web3 development within the nation, while also exploring the feasibility of Central Bank Digital Currencies (CBDCs).