Speaking at the NexTech Week trade show in Tokyo on Thursday, Masaaki Taira, a lawmaker in the ruling Liberal Democratic Party and head of its Web 3.0 project team, said Japan has seen the future — and it’s blockchain.
Taira — an outspoken cryptocurrency advocate — used his presentation on national strategies for emerging technologies to highlight Japan’s capabilities in Web3, or the vision of a new Internet built around decentralized blockchain technologies, the metaverse, and non-fungible tokens (NFTs).
“While other jurisdictions attempt to regulate a space that is not yet fully understood, Japan already has a relatively good grasp of what it is that we’re trying to promote,” Taira said, adding that global technology companies are taking note.
Japan’s government and Prime Minister Fumio Kishida have become enthusiastic backers of emerging technology, and Web3 in particular, as pillars of the country’s economic future. This at a time when U.S. cryptocurrency exchanges are being hit with lawsuits that are generating regulatory turmoil and doubts about the country’s Web3 future.
In contrast, a Japan government-affiliated white paper released in April set out the country’s path to widespread adoption of Web3 that includes crypto. The document has become a “major talking point” in Japan and overseas in the weeks since its release, said Taira.
“Recently, executives from Microsoft, Amazon, Meta, and various other companies have visited Japan, including an Apple executive who came to Japan today,” he said. “It’s basically a case of them reading the white paper, traveling here to meet with us, and bringing a number of new proposals along with them.”
Until the government’s pivot toward crypto and blockchain began gathering pace at the beginning of this year, there was a sense that the Japanese digital asset space was stagnating.
Despite Japan’s status as an early crypto adopter, the collapse of Tokyo-based crypto exchange Mt Gox in 2014 followed in 2018 by a hack at the Coincheck exchange and the loss of hundreds of millions of dollars worth of cryptocurrency undermined trust in the industry.
A regulatory clampdown followed and much tougher rules were imposed on crypto trading platforms by the Financial Services Agency, which saw some exchanges exit the country, including Binance in 2018.
However, as the FTX exchange collapsed in November last year amid charges of fraud and customers across the globe lost vast amounts of savings and investments, Japan’s FTX clients were ringfenced, and their funds are in the process of being returned.
“Japan’s cryptocurrency exchanges are the safest in the world,” Taira said. “From our point of view, the failure throughout the entire FTX affair to properly separate company and customer assets is barely conceivable.”
He also pointed to other developments.
Japan’s experimentation with stablecoins is bearing fruit, he said, with the government advisory body he oversees investigating ways to connect public and private blockchains for greater scalability.
Elsewhere, Japan’s historical soft power strengths in anime, manga and gaming lend themselves well to the Web3 space, he said, particularly in the sphere of NFTs and metaverse development — two areas full of potential value that have yet to be adequately explored, he said.
On Artificial Intelligence, another major theme of the NexTech Week trade show, Taira said capital investment is needed to bolster experimentation and encourage the nation’s young developers to set up shop in the country, rather than heading overseas.
Mistakes had been made in the past when nurturing Japan’s talented young entrepreneurs and innovators, he acknowledged, leading many to seek more favorable conditions in places like Dubai and Singapore.
“I would like to create a system that will allow young researchers and start-ups to access and utilize increased resources under improved conditions,” he said.
That would include ironing out a “number of tax issues” that remain a final barrier to increased development, he said.
The final day of NexTech Week is on Friday, with two young entrepreneurs from blockchain platform Financie Inc. and J1 League soccer team Avispa Fukuoka set to discuss their experience working in Web3.
The duo operate the Avispa Fukuoka Sports Innovation DAO (decentralized autonomous organization), which is designed to introduce global fans to the soccer team of a city that has emerged as a technology startup hub in Japan.
Their presentations should help audiences get a better sense of whether Taira’s efforts to date are bearing fruit.