Liberal Democratic Party Digital Society Promotion Headquarters releases proposal to resolve virtual currency tax deficiencies

DAO recommendation confirmed

On the 25th, Representative Masaaki Taira, chairman of the Liberal Democratic Party’s web3 project team (PT), announced that his proposal regarding the creation of rules for DAOs (decentralized autonomous organizations) was approved by the Liberal Democratic Party’s Policy Research Council on the same day.

It has disclosed the contents of the recommendations it made under the name of the Digital Society Promotion Headquarters, and explained that it will now submit its proposals to relevant ministries and agencies, including the Financial Services Agency. The aim is to resolve deficiencies in laws, taxes, accounting, etc., and to popularize DAOs in Japan.

web3PT.

“Proposals regarding DAO rulemaking – Regarding the form of a new organization in our country” was approved by the Liberal Democratic Party Policy Research Council on January 25th. In the future, we will apply to related ministries and agencies such as the Financial Services Agency. https://t.co/2n08WuIZRk

— Taira Masaaki (@TAIRAMASAAKI) January 25, 2024

web3PT is working hard to create rules for DAO, such as by holding the “DAO Rule Making Hackathon.” A summary of the hackathon was held on the 24th, and the recommendations were expected to be published soon.

connection: “Create rules to support people taking on new challenges in DAO” Liberal Democratic Party web3PT summarizes the hackathon

The reason behind the government’s efforts to create rules for DAOs is that DAOs are beginning to produce results in Japan in areas such as regional revitalization and solving social issues. The title of this proposal includes the words “About the new form of organization in our country.”

connection:Japan Crypto Asset Business Association announces “Guidelines for building regional revitalization DAOs”

The basic stance regarding DAOs is to immediately implement measures that can be addressed by amending ministerial ordinances or implementing them. In addition, other matters will be considered further and implemented in stages.

Contents of the proposal

This proposal begins with a review of the hackathon mentioned above. The hackathon was held a total of four times from November to December last year, and 21 companies and organizations that are implementing or planning projects using DAO participated. It is said that over 100 issues and requests were raised by the participants.

He explained that these problems and requests can be broadly divided into the following three categories.

• Legal issues
• Tax/accounting issues
• Other issues

Of these, legal issues and tax/accounting issues account for 80% of the total. Specifically, the contents are as follows.

• Granting corporate status through the development of laws and regulations
• limited liability security
• Guaranteed anonymity
• Improved distribution
• Reduce tax risk by clarifying tax treatment

As a result of the hackathon, the Digital Society Promotion Headquarters stated, “When considering rule-making regarding DAOs, it is difficult and inappropriate to set comprehensive and uniform rules that apply to all DAOs.” He explained that he had come to this conclusion. Based on this, the committee will first make recommendations for creating rules to realize a DAO using limited liability companies.

It is said that there were many requests from participating organizations at the hackathon to form and operate a DAO with corporate status. When considering granting corporate status, we judged that among the various existing corporate forms, a limited liability company has a relatively high affinity with the reality of a DAO. The reason for this is that limited liability companies are based on the assumption that ownership and management are the same, and autonomy based on the articles of incorporation is relatively widely recognized.

In the above-mentioned example of “Things that can be addressed by amending or implementing ministerial ordinances,” “In order to realize a limited liability company DAO, the Cabinet Office “to revise the Ordinance.”

The Digital Society Promotion Headquarters stated the following in the conclusion of its recommendations.

connection: Mitsui Sumitomo Insurance introduces DAO to new graduate recruitment process, measuring contribution by number of acquired tokens

Japan’s Web3 Policy Special Feature

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