Japan is reportedly considering easing its stringent regulations on the cryptocurrency industry, driven by a surge in interest from Japanese companies exploring blockchain-related initiatives.
Recently, Sony Group became the latest major Japanese corporation to embrace blockchain technology. The company officially launched its digital ledger, Soneium, positioning it as a platform for developers to create applications that could enhance its offerings in gaming, music, and film.
Sony is not alone in its exploration of blockchain technology. Other major Japanese corporations, including Nippon Telegraph & Telephone Corp., Toyota Motor Corp., and Mitsubishi UFJ Financial Group (Japan’s largest bank), are pursuing their own blockchain-related initiatives.
Mitsubishi UFJ, for instance, is exploring the issuance of stablecoins, digital tokens designed to maintain a constant value.
EXPLORE: $300 Million Exploit: Japan’s DMM Bitcoin Exchange Suffers Largest Hack Of 2024
Japan Faces Pressure to Relax Crypto Regulations
The growing adoption of crypto by major Japanese corporations comes as the country faces growing pressure from the crypto industry to relax its regulatory framework.
Under Prime Minister Fumio Kishida, the country has taken steps to facilitate the listing of digital tokens on crypto exchanges and introduced rules for stablecoins, signaling a progressive stance toward the emerging Web3 space.
However, Kishida’s tenure is nearing its end, and it remains uncertain whether his successors will maintain the same focus on Web3 or ease regulations further.
One key point of contention is the tax rate on crypto gains, which can reach 55%, significantly higher than the 20% rate applied to traditional investments.
First, there was news that Sony would launch its own crypto exchange in Japan. Now, they have announced that they are working on an Ethereum L2 dedicated to entertainment, gaming, creators’ intellectual property rights and profit sharing. https://t.co/G2oVZuQgUT
— Pawel Huptas (@PawelHuptas) August 23, 2024
Angela Ang, senior policy adviser at blockchain intelligence firm TRM Labs, told Bloomberg that it takes time for regulators to become comfortable with new business models.
Despite this, she pointed to the increasingly innovative tone from Japanese officials as a reason companies like Sony are embracing blockchain technology.
EXPLORE: Tech Giant Sony Enters Japanese Crypto Market With Purchase Of Amber Japan Exchange
Japan’s Regulatory Approach Grounded In Past Lessons
Japan’s regulatory approach is grounded in lessons learned from past crises, such as the collapse of Mt. Gox in 2014 and the more recent $320 million breach at DMM Bitcoin in 2023.
The country’s stringent regulations are designed to protect investors but can create challenges for companies looking to innovate. Crypto lender Amber Group, for example, sold its digital-asset trading platform in Japan to a Sony unit last year, citing the country’s strict regulatory environment.
Despite these challenges, trading activity in Japan’s digital-asset exchanges is on the rise, with average monthly volumes nearing $10 billion in 2024, up from $6.2 billion in 2023.
As reported, the Financial Services Agency (FSA), the nation’s financial regulator, has also proposed a flat 20% tax rate on crypto gains, aligning them with traditional financial assets like stocks.
EXPLORE: 17 Best Crypto to Buy Now in 2024
Disclaimer: Crypto is a high-risk asset class. This article is provided for informational purposes and does not constitute investment advice. You could lose all of your capital.
