The National Tax Agency of Japan has enacted a partial alteration of its corporate tax guidelines, introducing fresh tax regulations for crypto token issuers.

In a significant development for crypto businesses in Japan, corporate taxes on unrealized gains from cryptocurrency are no longer mandatory, following a legislative change by the National Tax Agency on June 20.

The implementation of this tax reprieve occurs almost half a year subsequent to the Japanese government’s acceptance of a proposal to abolish the stipulation for crypto companies to remit taxes on unrealized profits on tokens they have issued and retained.

Japanese lawmakers have been considering innovative crypto tax rules since the previous August as a segment of an extensive tax overhaul for 2023. However, the tax authority only ratified the final approval this week. With the newly implemented rules, companies issuing tokens in Japan are free from the obligation of paying a standard 30% corporate tax on their holdings. Prior to this legislation, even unrecognized gains were liable for tax.

The governing Liberal Democratic Party anticipates that this adjustment will simplify the process for various firms involved in issuing tokens.

Japan’s cryptocurrency sector has been witnessing substantial transformations of late. Since June 1, stricter Anti-Money Laundering (AML) policies have been in force to monitor cryptocurrency transactions, aiming to align Japan’s legislative framework with international crypto regulations. The AML laws were amended in December after the Financial Action Task Force deemed them inadequate.

In the previous year, the government ratified legislation barring non-banking institutions from issuing stablecoins. Implemented a few weeks ago, the law asserts that the issuance of stablecoins within the country is confined to licensed banks, registered money transfer agents, and trust companies.

Japan was among the pioneers to legalize crypto as a form of private asset, and its crypto regulations are some of the most rigorous globally. Following the breaches at Mt. Gox and Coincheck, Japan’s financial overseer tightened regulations on crypto exchanges. The local regulations are speculated to have accelerated the return of assets to FTX users in Japan after the exchange’s worldwide downfall, unlike users in other countries that do not have a specified deadline for their reimbursements.