After spending 16 years as a bond trader at Goldman Sachs, Kei Oda found himself delving into the world of cryptocurrencies out of sheer boredom. Although he initially didn’t understand or believe in Bitcoin, leaving his job in 2016 opened his eyes to the potential of the startup space. Coming from a trading background, Oda’s attention span had become short-term due to the fast-paced nature of finance. This led him to explore Bitcoin trading, which he initially viewed as a way to pass the time. However, as he researched further, he became increasingly intrigued by the value proposition that cryptocurrencies offered, especially Ethereum. Recognizing the potential game-changing impact, Oda dived headfirst into the industry.
Japan’s crypto landscape has witnessed significant growth and progress over the years. Despite facing setbacks like the infamous Mt. Gox and CoinCheck hacks, the country has emerged as a progressive hub for crypto innovation. Japan has embraced the use of Bitcoin as a form of payment, although it is not considered an official government currency. The acceptance of Bitcoin has contributed to the vibrancy of Japan’s crypto ecosystem. Moreover, Japanese financial firms have shown keen interest in security tokens, an area that has gained less attention globally. The Japanese market seems to have developed its own unique identity within the crypto industry, with its own cycles and trends, potentially delayed compared to other regions.
One major hurdle that Japan still faces in its crypto journey is taxation. The previous regulation imposed heavy taxes on startups that issued tokens within Japan, placing a significant burden on revenue realization and personal taxes. The tax rate on crypto trading profits can be as high as 55%, making it far less attractive for startup founders and entrepreneurs compared to countries like Singapore, Hong Kong, and Dubai, which offer significantly lower tax rates or even zero income tax. Recognizing the need for change, the Japanese government is actively working toward creating a more favorable tax environment to retain and attract talent within the Web3 industry.
Despite the challenges posed by taxation, Japan’s government has demonstrated a progressive and forward-thinking mindset when it comes to Web3 technologies. Initiatives such as digital nomad visas are being planned to attract global talent to the country. The weakened yen in comparison to the United States dollar has also made Japan an attractive destination for individuals earning in foreign currencies. Furthermore, Japan offers a large market with ample opportunities for startups to capture. The combination of a progressive government and a substantial market size contributes to the overall attractiveness of Japan’s crypto scene.
While the Japanese crypto scene is active, traditional meet-ups often follow a formulaic structure that hinders effective networking. Kei Oda recognized this gap and co-created the Tokyo Blockchain Night event, which eschews traditional presentations in favor of providing a casual environment for like-minded individuals to connect, share ideas, and seek potential collaborations. The event aims to foster genuine connections and create a supportive community in line with Quantstamp’s ethos, which focuses on helping others and paying it forward.
The CoinCheck hack prompted Japan to implement stricter regulations surrounding asset custody, creating a more secure environment for crypto users. However, these regulations also presented challenges for international exchanges like FTX. FTX’s Japanese subsidiary, Liquid, remained fully solvent and protected the funds of Japanese customers due to the stringent regulations. In contrast, the future of funds for FTX’s international customers remained uncertain. While the regulations may have initially caused some difficulties for exchanges, they have ultimately led to an increase in Japanese activity in the crypto space. Notably, Japan’s largest banking conglomerate, MUFG, plans to launch stablecoins, further highlighting the country’s growing interest and involvement in the crypto industry.
Kei Oda’s journey from bond trader to crypto enthusiast provides valuable insights into Japan’s dynamic and evolving crypto landscape. Despite taxation challenges, Japan’s crypto ecosystem has thrived, driven by progressive government initiatives and a vibrant market. Innovation, unique networking events, and evolving regulations have positioned Japan as a promising hub within the global crypto industry.