The political elite of Japan wants to usher the country into the Web3 age with little bureaucratic red table to bring investments and create a friendly regulatory environment for blockchain startups in Japan. Several lawmakers have taken the initiative this year to advance crypto and Web3 policy by issuing studies and proposing revisions to current legislation and regulations. Fumio Kishida, Prime Minister of Japan, identified Web3 as a foundation of economic transformation at the beginning of the year, which kicked off the fast advancement of the crypto industry in Japan. This move by the Prime Minister has changed the perception of crypto in Japan as regulators and political elites warm up to crypto.
In November of 2021, Liberal Democratic Party (LDP) candidate Kishida became prime minister of Japan, where his Web3 vision coincides with his administration’s goals of economic revival and revitalization. According to Kishida, blockchain, NFTs and Web3 have the potential to bring private investment back to Japan and help him deliver on his promise of economic expansion and more evenly distribution of wealth in the Japanese society. The change in the regulatory landscape has increased the bullishness toward crypto in Japan, a piece of exciting news for entrepreneurs looking to break into the Japanese market.
Japan’s crypto asset sector has seen a rise in interest and trading volume in recent years. As per Statista, in Japan, the total value of all cryptocurrencies traded in the 2020 fiscal year reached 117.97 trillion yen, an amount which showcases that crypto adoption in Japan may not be far from the reality due to continued trading interest from retail investors. Additionally, the total value of all trades on the spot market reached about 20.61 trillion yen, whereas all margin trades were 97.4 trillion yen, approximately five times as much, indicating that Japanese traders are interested in trading cryptocurrencies on leverage to maximize their profit potential. Banking on the trading interest, the political elite is trying to capitalize on Japanese traders’ interests by creating regulations protecting investor interests.
About three million people in Japan held crypto assets on crypto exchanges in 2021. People in their forties made up the bulk of account holders, with those in their thirties coming in a close second. BitFlyer, Coincheck, and GMO Coin were three of Japan’s most important cryptocurrency exchanges.
However, the current regulations in Japan are stringent in nature due to which Japanese cryptocurrency exchanges include fewer assets than their foreign counterparts due to strict laws restricting the listing of new cryptocurrencies, even though cryptocurrencies are growing in popularity in Japan. A self-regulatory authority for the cryptocurrency sector, the Japan Virtual and Crypto assets Exchange Association, issued a “green list” of virtual currencies that do not need to be screened before being listed by brokerage firms in 2022, making it easier for virtual asset platforms to list cryptocurrencies. Such business-friendly moves by industry stakeholders are bringing Japan back on the map for blockchain startups and investors as a favourable jurisdiction for setting up businesses.
Further, Japan officially recognised and legalised stablecoins as a form of legal tender on June 3, 2022. The Financial Services Agency (FSA) of Japan drafted the first version of the law in December 2021. By March of 2022, it had made it into Parliament, where it received overwhelming support. The legislation’s principal goal is to safeguard investments and will take effect in 2023 - a regulatory step that aims to bring back blockchain investors to Japan. As Japan is the third largest economy in the world, such regulatory developments are playing a huge role in cementing the crypto industry in Japan.
By bringing together the leading companies in Japan to collectively usher in the future of Web3, Astar Network, a smart contracts platform, broke a world record by publishing a national newspaper advertising with the largest brands in a single ad. The September 26 issue of Nikkei featured advertising from 329 blue chip firms backing cryptocurrencies.
According to the Japanese Blockchain Association, Astar Network is Japan’s most widely used blockchain on the Layer-1 technology stack. The Nikkei newspaper includes an advertisement with a QR code in the bottom right corner that may be scanned to acquire a free, non-transferable NFT. If a user does not have a wallet address, the QR code will create one for them. This move is a marketing masterstroke critical for increasing the adoption of NFTs in Japan and introducing millions of people to the NFT industry.
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Presently, Web3 is a critical component of the Japanese government’s national policy. Astar Network CEO Sota Watanabe is guiding the government and many major Japanese corporations toward success in this area. Web3 represents a significant chance for the nation to increase its GDP. Large financial institutions and well-known corporations like GMO, DeNA, Accenture, Microsoft, Amazon Web Services, and others support the plan because they want to see Japan succeed in increasing the adoption of blockchain and cryptocurrencies among Japanese citizens.
The Astar Network allows developers to create decentralised applications using EVM and WASM smart contracts and provides them with real interoperability through cross-consensus communications (XCM). Astor Network is built by developers for developers. Astar’s innovative Build2Earn approach enables developers to be compensated for their work through a decentralised application (dApp) staking mechanism.
With the backing of all major exchanges and tier 1 VCs, Astar’s dynamic ecosystem has emerged as Polkadot’s dominant Parachain internationally. Astar gives developers the versatility of all Ethereum and WASM toolings to create their dApps. Top TVL dApps may use an incubator hub from Astar SpaceLabs to help their development on the Polkadot and Kusama Networks.
In my opinion, the Nikkei advertisement with an built-in NFT QR code is a genius marketing move that introduces millions of users to the world of crypto and NFTs. The continued support of the regulators and the push for friendly regulations from industry stakeholders may change the cryptocurrency landscape in Japan in the coming future. This may bring millions of users to crypto, which will assist in increasing the adoption of cryptocurrencies with billions of dollars being invested in Japan to attract institutional investors and entrepreneurs.
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