The tax enforcement agency for the Japanese government, the National Tax Agency (NTA), recently announced the implementation of new anti-money laundering (AML) measures that will force cryptocurrency gateway businesses to hand over information about their customers.
A recent ruling will give the NTA authority to demand customer information for tax purposes, and the agency will be implementing a system to streamline this process.
An NTA concluded that more than 300 people claimed at least 100 million yen in crypto earnings. Much like measures taken in other jurisdictions, there is a minimum threshold which will allow law enforcement to target high volume traders.
In Japan, any trader with more than 200,000 yen per year in crypto earnings is required to file those gains with the tax authority. However, the agency says that they will only be targetting traders who they suspect of earning at least 10 million yen from cryptocurrency investments without filing at least half of those gains with the tax authority.
In addition to payment processors and gateways, businesses involved in the sharing economy, such as online stores, will also be required to turn over customer data.
According to The Mainichi, the government expects the program to be fully operational by April 2020.
Enforcement In Other Jurisdictions
The type of cryptocurrency tax enforcement that is developing in Japan is not unusual as many governments, notably including the United States, seem to be taking a similar approach.
Coinbase, the largest bitcoin to fiat gateway in the US, was forced by a court order to hand over customer information for traders who earned over $20,000 with their crypto investments. Initially, the government wanted customer information for every single one of Coinbase's clients, but the judge in the case decided on the compromise of only exposing high volume traders.
The US SEC (Securities and Exchange Commission) and other US regulatory agencies are stepping up pressure on businesses involved in the blockchain infrastructure in order to force compliance with AML and KYC policies.