Contrary to what global leaders are doing, Japan set to embrace crypto

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Japan's ruling Liberal Democratic Party Web3 project team has said that while other countries are inactive and indifferent towards the challenges in the crypto industry, Japan is poised to have a distinctive impact in the field and sees it as an opportunity rather than a crisis.

It is difficult to express the extent to which Japan differs from the rest of the world. The recent FTX collapse and other crypto failures have not caused significant concern among the Japanese. 

Masaaki Taira, a member of Japan's House of Representatives and the ruling Liberal Democratic Party's Web3 Project Team, stated that the FTX crash has had no influence on decision-making.

Despite growing caution from lawmakers and regulators globally towards crypto, Japan continues to support and promote the Web3 project as part of its national strategy. A small but influential group of politicians are developing guidelines for areas such as decentralised autonomous organisations (DAO) and non-fungible tokens (NFT). 

Japanese exchanges are finding it easier to list tokens, and a significant tax requirement has been revised, benefiting crypto entrepreneurs.

This raises the question of why Japan is now embracing crypto. The simplest answer may be that Japan has already experienced the challenges of crypto and has demonstrated its ability to withstand them. 

As an early adopter of crypto, Japan suffered from the Mt. Gox hack in 2014 and then the Coincheck hack in 2018, which resulted in the theft of over $500 million and was the largest hack in the history of crypto. 

Prior to the Coincheck hack, Japan was poised to be a major player in the crypto industry, but the hack caused alarm among regulators and temporarily overshadowed Japan's role in the industry.

Contrary to appearances, though, Japan was simply taking steps to improve its crypto regulations after the hacks. In response, Japan mandated the separation of customer and exchange assets, with most exchange assets stored in cold wallets. The regulatory approach proved its effectiveness when FTX experienced issues.

Ryosuke Ushida, the chief fintech officer at Japan's Financial Services Agency, which regulates crypto, stated that it is likely that FTX Japan's Japanese customer assets will not be significantly impacted by the Chapter 11 global bankruptcy filing. 

In Japan, crypto assets are legally separated, making it easier for FTX Japan to return customer funds. FTX Japan is expected to allow user withdrawals as soon as February.

Shashank is the founder of yMedia. He ventured into crypto in 2013 and is an ETH maximalist. Twitter: @bhardwajshash