As global regulators grow wary of cryptocurrency, Japan embraces Web 3

by | Feb 1, 2023 | Market, Market News | 0 comments

Japan is in a position to play a special role in the cryptocurrency business, whilst many other nations are just stoically shrugging their shoulders in the cold wind.

According to a proposal by the Web3 project team of the ruling Liberal Democratic Party of Japan. Or to put it another way, Japan finds opportunities when other countries dread calamity.

It’s difficult to quantify how far behind the rest of the globe Japan remains after a recent trip to Tokyo. Neither the FTX crash nor even the series of crypto implosions that came preceding it seemed to have much of an impact on the people I spoke with. Masaaki Taira, a representative in the House of Representatives and the Web3 Planning Committee for the ruling Liberal Democratic Party, claimed that the FTX crash had no impact on policy decisions.

Also Read: The FSA of Japan plans to abolish the restriction on foreign stablecoins in 2023

Web3 promotion continues to be a cornerstone of Japan’s national strategy as legislators and regulators from the U.S. to Europe to Asia express growing caution regarding cryptocurrency. A tiny but loud minority of legislators are putting up regulations for anything from non-fungible currencies to decentralized autonomous organizations (DAO) (NFT). Japanese exchanges are discovering it simpler to list tokens. A burdensome tax requirement has been changed, which is a resounding achievement for cryptocurrency business owners. Coinbase and Kraken left Japan, while Binance, which had already irritated Japanese regulators, was able to acquire a Japanese exchange. Additionally, stablecoins—which are now illegal on Japanese exchanges—have a new direction to follow.

Ghosts of previous hackers

The simplest explanation could be that Japan has already visited Hell and back when it comes to bitcoin. It demonstrated its storm-weathering abilities. So, some of the earlier fear has dissipated

Japan was a pioneer in the crypto industry, and the losses shortly followed. Japanese exchange Mt. Gox had a hack in 2014. Then, in the biggest hack in cryptocurrency history, hackers attacked once more in early 2018, stealing roughly $500 million from the Japanese exchange Coincheck. Japan was on track to rise to the Asian and even global capital of cryptocurrency not long before the Coincheck hack. Regulators were severely alarmed by the breach, and Japan was assumed to vanish from the crypto scene. It first appeared to be nearly impossible to publish new tokens on exchanges.

It turns out that Japan had not vanished; rather, it had simply spent some time reorganizing its affairs. Japan mandated that customer assets and interchange assets be kept apart and that the majority of exchange assets be stored in cold wallets as a result of these breaches. Japan’s regulator proved effective when FTX crashed.

Also Read: Japan Returns Its First Crypto ATM After Four Years

The Chapter 11 international bankruptcy filing is unlikely to have a significant impact on the assets held by FTX Japan’s Japanese customers, according to Ryosuke Ushida, a top fintech official at the Financial Services Agency, the body in charge of supervising cryptocurrency.

The majority of jurisdictions do not divide cryptocurrency assets. They are formally separated in Japan. That makes FTX Japan’s decision to refund the funds easier.

 Also Read: Customers of FTX initiate class-action lawsuits in order to receive preferential damages.

They request this form of asset segregation because they’ve learned from failures made in the past, such as the hacks of Mt. Gox and Coincheck. Fortunately or unfortunately, they are used to crises of this nature in the crypto world. they are knowledgeable in comparison to other authorities, Ushida remarked. Users may be able to withdraw money from FTX Japan as early as February.

In stark contrast to the US, one of Japan’s comparative advantages is regulatory clarity. In addition to a patchwork of regulatory agencies, the United States has several federal authorities, such as the Securities & Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC). The FSA is the only crypto regulator in Japan.

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