Japan Takes a More Crypto Welcoming Approach
The devil will be in the details but just as the U.S. government is ramping up its regulatory approach to the crypto space, Japan is going a different route under the leadership of the more crypto-welcoming Prime Minister Fumio Kishida.
On issues ranging from tax reform and the creation of a single, responsive Web3 minister, to strategies to attract crypto talent to Japan, the Japanese say they want to streamline crypto regulation and put decision-making in the executive branch instead of the bureaucracy. The idea of a single point-of contact for entrepreneurs, founders and CEOs to support their efforts is especially interesting. What remains to be seen is how it’s executed, as Coindesk reports, but we think this is a welcome departure from the U.S. model.
Japan's political leaders want to take the country into the Web3 era without the bureaucratic slog that’s typical for the nation’s policymakers.
So far this year, a handful of politicians have been driving crypto and Web3 policy forward on their own, publishing reports and proposing updates to existing laws and regulations. That rapid push began earlier in the year when Japan Prime Minister Fumio Kishida designated Web3 a pillar of economic reform.
Kishida of the Liberal Democratic Party (LDP) was elected prime minister in November 2021. Web3 aligns with his administration’s agenda of economic recovery and revitalizing local communities, and could be a way to attract private investment back to Japan and fulfill his campaign promise of growth and wealth distribution.
“The crypto market cap had become a size that no government in this world could ignore,” Arisa Toyosaki, founder of decentralized finance (DeFi) options market Cega, said. “Investors, traders and founders combined could make a fairly significant bump in Japanese economic metrics,” she said.
Kishida’s administration established a policy office dedicated to Web3 under the Ministry of Economy, Trade and Industry, or METI, although it is likely other government bodies, including those responsible for finance, tax and justice, will also be involved in forming crypto policies.
In Japan, policies are usually designed by the bureaucracy, but with Web3 the politicians have taken the lead instead. As a result, a policy drafting process that might ordinarily take months has taken weeks.
In the case of Web3, Takuya Hirai, a former minister for digital transformation, appointed LDP politician Masaaki Taira to head a NFT (non-fungible token) working group that was established in January.
A veteran lawmaker who has served in office since 2005, Taira has a deep understanding of how LDP policymaking works and has persuaded Kishida to support crypto and Web3 policy.
LDP politician Akihisa Shiozaki, who was elected to Japan’s House of Representatives last year, has taken the lead on developing Web3 policy recommendations.
Within months, the group published a white paper, a kind of technical manifesto, that said the country needed a Web3 minister and a one-stop shop consultation desk so private companies and entrepreneurs would no longer need to contact multiple ministries. Many of its proposals are about clarifying guidelines and standards.
The “NFT white paper” was released in April. It “was very unique,” Shiozaki told CoinDesk, in that it took only three months and was drafted by politicians and lawyers, not by bureaucrats.
If the white paper had followed the bureaucratic route, it would have undergone a long process of 10 or so meetings, each meeting two or three weeks apart, and the government would have called in scholars, formed an advisory board and asked for public comment.
By circumventing that process, Shiozaki said he shortened the process by nine months.
Still, although the paper was titled “NFT White Paper,” Shiozaki pointed out that the subtitle is “Japan’s NFT strategy for the Web 3.0 era,” which he said “broadens it a lot.”
The paper was delivered to Prime Minister Kishida. On May 5 he gave a speech in London pledging to “develop an environment for the promotion of Web3,” citing blockchain technology, NFTs and the metaverse.
“Kishida’s commitment made in the speech led to strong political momentum in support of Web3 policies,” Shiozaki said.