Japan’s ambition to establish itself as a dominant force in the crypto and Web3 industry has sparked both fascination and anxiety in South Korea. The nation’s crypto firms have expressed concerns over Japan’s proactive policies aimed at fostering Web3 innovation. These policies have the potential to transform Japan into what South Korea’s largest newspaper, Chosun Ilbo, refers to as a “crypto and Web3 El Dorado.” While South Korea grapples with tightening regulations and dwindling investor interest, Japan appears to be taking the opposite trajectory by relaxing restrictions and introducing support measures for the industry.
Prime Minister Fumio Kishida has signaled his determination to deregulate certain sectors of the crypto market, a move that contrasts with Japan’s historically stringent crypto regulations. Self-regulating bodies governing Japanese crypto exchanges have already begun easing their token listing policies, ushering in a wave of potential opportunities. Moreover, the government has initiated reforms aimed at mitigating the adverse effects of restrictive crypto tax laws. Critics argue that these tax laws have driven Japanese firms away from the sector. Chosun Ilbo highlights the Japanese government’s proactive role in leading the implementation of support measures and regulatory easing.
Chosun Ilbo points out Prime Minister Kishida’s active involvement in the crypto and Web3 sphere, highlighting his participation in the inaugural WebX conference hosted by CoinPost, Japan’s largest crypto-focused media outlet. Kishida’s speech was joined by high-profile government officials, including the nation’s economy minister and the chair of the ruling Liberal Democratic Party’s policy research council. The event also featured prominent figures such as Changpeng “CZ” Zhao from Binance and Roger Ver, popularly known as the “Bitcoin Jesus.” Kishida’s commitment to Web3 was initially unveiled during a meeting with investors in London in May 2022, followed by a series of Web3 pledges and the expected release of a “basic policies” framework in November 2022. The Liberal Democratic Party has subsequently established Web3 and NFT taskforces, further demonstrating Japan’s commitment to the industry.
Japan’s Forward-Thinking Approach
Chosun Ilbo traces Japan’s proactive Web3 policies back to a cabinet meeting in 2021 when ministers resolved to provide extensive support to Web3 companies to stimulate startup development and enhance digital transformation. The media outlet claims that Japan has expedited tax reforms and stablecoin issuance laws. In June, Japanese banks and trust operators gained legal authorization to issue and distribute stablecoins, while South Korean counterparts are still awaiting similar regulatory approval. Consequently, overseas cryptocurrency-related companies are flocking to do business in Japan, including industry giants like Binance and South Korea’s gaming powerhouse, Netmarble.
As Japan gains momentum in the crypto and Web3 industry, concerns are mounting in South Korea. Experts and industry insiders emphasize the need for South Korean government and politicians to pay closer attention to fostering the domestic market and creating a favorable regulatory environment. There is an urgency to overhaul the crypto asset system promptly to prevent losing ground to Japan. Nevertheless, South Korea remains highly competitive in the cultural content space with the global popularity of K-pop and Korean dramas.
While Japan’s ambitious drive to become a leading crypto and Web3 powerhouse poses concerns in South Korea, it also reveals the need for South Korean authorities to reevaluate their regulatory strategy and invest in cultivating the domestic market further. The dynamic landscape of the industry calls for adaptability, innovation, and collaboration to establish a sustainable and vibrant crypto ecosystem in both nations.