6 Key Topics to Watch in Japan's Web 3.0 Industry in 2024

Looking at the trends in the Japanese Web 3.0 industry, can we see the future of the world?

Did you know that Japan's Web 3.0 market is considered to be the most mature in the world? As of 2017, Japan accounted for approximately 43.6% of the world's Bitcoin trading volume. However, due to a series of hacking incidents at large exchanges, it is still fresh in our memory that the public has developed a mindset that "cryptocurrency is suspicious."

The Japanese government also began to regulate cryptocurrency trading after the incident, and investors from around the world have left the Japanese market, saying that "a market bound by rules is not attractive."

However, the essence of Web 3.0 was originally the idea of ​​taking back individual assets and rights from the hands of a few large corporations, aiming for a more fair and decentralized information infrastructure for everyone.

In an Internet space that is provided exclusively by a single company, the rules of use may suddenly change depending on the mood of the company. However, in the area of ​​Web 3.0 using blockchain, there is a possibility that the world of the Internet can be restored to its original form of public infrastructure.

Now that the speculative heat has subsided and blockchain technology has developed further, the Web 3.0 industry is once again beginning to steer toward realizing its original ideals. As a result, the Japanese market has once again attracted attention.

Think about it. Wouldn't it be unsettling if companies entrusted with public infrastructure equivalent to electricity, gas, and water networks were doing whatever they wanted without any rules? That is why Japan is being put in the spotlight as "the legal regulations established by Japan will be the guideline for Web 3.0."

In November 2023, when the cryptocurrency exchange "FTX" collapsed, more than 1 million investors around the world were unable to withdraw their funds. However, in Japan, cryptocurrencies and cash equivalent to 24.3 billion yen have been withdrawn to investors affected by the incident. This is the result of Japan's implementation of legal regulations and legal preparations in the Web 3.0 area ahead of the rest of the world. It may be a blessing in disguise, but investors can trust that Japan will protect them even in times of emergency.

The Kishida administration has determined that Japan can become a global standard in the Web 3.0 field, and is continuing regulatory reform as a national strategy. There is no other country that is so proactive in developing a Web 3.0 business environment. That is why observing industry trends in Japan is paramount when predicting the future of the industry.

Six keywords that symbolize Japan's Web 3.0

Before looking at the current state of the Japanese Web 3.0 industry, I would like to unravel why the Japanese Web 3.0 industry has become the focus of global attention through six keywords. If you watch the news after learning the basic knowledge, you will be able to measure things from a different perspective.

1. The Mt. Gox Incident

▶Since July 2024, Mt. Gox has begun making payment measures to creditors in this case.

The massive cryptocurrency leak that shocked the cryptocurrency industry

In February 2014, the server of the Japanese cryptocurrency exchange "Mt. Gox" was hacked and private keys were leaked. A total of about 47 billion yen worth of Bitcoin and deposits were leaked. At the time, more than 40% of the world's Bitcoin transactions were conducted in Japan, so this incident shocked the world and the cryptocurrency market immediately cooled down.

From the perspective of protecting users, the Japanese government has rapidly promoted the establishment of laws regarding cryptocurrency. It was also because of this incident that cryptocurrency traders were required to register with the Financial Services Agency. This legal regulation became the trigger for ensuring the safety of cryptocurrency in Japan.

2. Financial Services Agency Administrative Guidelines

Clear people's doubts about Web 3.0 technology!

In April 2017, following the amendments to the Payment Services Act and the Act on Prevention of Transfer of Criminal Proceeds, the Financial Services Agency formulated guidelines for administrative staff. These guidelines clarified the scope of crypto-assets and the targets of regulation. In Japan, the scope of crypto-assets has become more specific, making it easier to conduct emerging businesses using Web 3.0-related technologies.

3. FY2020 Ruling Party Tax Reform Outline

Consideration of taxation methods for crypto assets

The "FY2023 Ruling Party Tax Reform Outline" was released on December 16, 2022. While the review of the NISA and other frameworks tends to attract attention, the outline also included a proposal on "how to handle end-of-period mark-to-market tax on crypto assets." In response to this, Japan has begun considering the legal and accounting approach to the treatment of crypto assets, which can be considered public goods other than for short-term trading purposes.

4. NFT x Intellectual Property (IP)

Content business that only Japan can do

The term NFT started to attract attention in 2021 when Jack Dorsey's first tweet was valued at approximately 300 million yen. The market for buying and selling digital data that cannot be counterfeited using blockchain has attracted attention, especially in the art world.

Japan has a large amount of world-class manga and anime content. There is a lot of attention being paid to turning these into NFTs. In addition, the Japanese manga and anime market has previously suffered damage from pirated copies. There is also hope that combining NFTs with each IP will enable international rights protection.

5. Web 3.0 Project Team

The ruling party is positive about Web 3.0

The Liberal Democratic Party has an organization called the "LDP Digital Society Promotion Headquarters." This organization also has a "Web3 Project Team," which proposed a white paper summarizing crypto assets to the Cabinet in May 2023. The ruling party's active policy recommendations for Web 3.0 are also helping Japan's crypto industry.

6. Amended Payment Services Act

Will the spread of cryptocurrency payments accelerate?

As of June 2023, stable coins have been legally defined as an electronic means of payment, promoting the spread of crypto assets. Stable coins are basically secured by legal tender, but there have been cases where their prices have plummeted. Therefore, Japan became the first country in the world to enact legislation to protect users. It has also been pointed out that it has the potential to eliminate money laundering risks.

Glossary

Private key: A password used to verify an individual's identity when sending and decrypting information on the blockchain.

End-of-period market value tax: Under the Corporation Tax Act, crypto assets are subject to taxation on unrealized gains and losses calculated by market value at the end of the period. It has been pointed out that this is hindering technological development and business development.

NFT: Non-Fungible Token. Digital data with an unforgeable certificate of appraisal and ownership. It has value by proving its uniqueness and rarity.

Crypto: Crypto. A general term for assets based on cryptography. A general term for crypto assets.

Stablecoin: A crypto asset designed to adjust its value in conjunction with legal tender in order to stabilize its value.

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