The Ishiba Cabinet is in chaos as hopes and concerns collide. What does the future hold for Web 3.0 in Japan?

Shortly after the new administration was formed, the political situation became fluid.

On October 1, 2024, Shigeru Ishiba, president of the Liberal Democratic Party, was elected as the 102nd Prime Minister of Japan, and a new cabinet was formed. Prime Minister Ishiba had run in the LDP presidential election five times, and finally won his long-cherished dream of becoming president. Prime Minister Ishiba was always ranked high in the standard opinion polls on "who is suitable to be the next prime minister," and he had gained support mainly in rural areas.

However, the party's base was unstable, and the road was long, with "factional logic" at work many times. Despite this, Prime Minister Ishiba decided to dissolve the House of Representatives just a few days after being nominated as prime minister. The dissolution, with the LDP facing headwinds over the issue of not reporting political funds and party income, was a crucial move to get out of a difficult situation.

However, in the recent Lower House election held on October 27, the LDP lost a large number of seats from the 247 seats it had before the election, and had to settle for 191 seats. Even when combined with its ruling coalition partner, Komeito, the LDP only managed to secure 215 seats, failing to maintain a majority as the ruling party.

The LDP's defeat in the Lower House election, which was a surprise attack, after the LDP had completely changed its statement that it would dissolve the Diet after a debate, has left the administration in an extremely difficult situation. There was even a temporary scenario in which Prime Minister Ishiba would not be selected as prime minister, depending on the cooperation of the opposition parties.

In the end, Prime Minister Ishiba was elected in the runoff election, and he managed to avoid the negative label of being the prime minister with the shortest number of days in office since the war. However, the current situation of a minority ruling party means that the administration is unstable, and there are growing concerns that this could lead to political stagnation.

In the current situation, it is impossible for the ruling party alone to pass the bill, and there is no way to achieve this without the cooperation of other parties. In particular, the passage of next year's budget bill will be the biggest focus. The Ishiba Cabinet, which has barely managed to maintain power, will soon be faced with a critical moment, and political maneuvering over the passage of the budget bill is likely to accelerate.

In some cases, he may be forced to resign in exchange for the passage of the budget bill. Under such circumstances, the LDP conceded the position of chairman of the House of Representatives Budget Committee, which oversees the deliberations of the Budget Committee, to the Constitutional Democratic Party of Japan. It is extremely unusual for an opposition party to hold the post of chairman of the House of Representatives Budget Committee, and the LDP has already been greatly affected by becoming a minority ruling party.

The future administration of the government and the trend of parliamentary deliberations are becoming even more unclear. However, there is no time to stop in order to solve the issues surrounding Japan and the world. This is true for both the ruling and opposition parties, and in particular, given that the proportion of standing committee chair posts held by the opposition parties has increased, it can be said that they have a greater responsibility than ever before to hold constructive discussions that satisfy the public.

In addition, the Diet is also expected to hold forward-looking discussions to promote innovation and create national interests. In this context, the actions of the Ishiba Cabinet are likely to attract attention in the field of Web 3.0.

▶Image source: NHK "House of Representatives Election 2024 Special Site"

Minister Taira's presence as digital minister is important in moving the industry forward

At the time of writing, the digital minister, who is the key to digital policies in the Ishiba Cabinet, is Masaaki Taira, a member of the House of Representatives who has supported Prime Minister Ishiba, and expectations for regulatory reform are higher than ever.

Minister Taira has a strong image of being at the forefront of developing Web3.0-related regulations, such as coordinating Web3.0 policies as the chair of the LDP web3PT (project team).

Since Minister Taira began focusing on the Web3.0 field, progress has been made in all areas, including the revision of the cryptocurrency tax system by companies and the enactment and implementation of the DAO law. In terms of actively working with the industry, it can be said that the conditions for Japan to promote Web3.0 are now in place more than ever before.

For the Web3.0 industry, a major focus will likely be on whether the policy of promoting Web3.0 established by the Kishida Cabinet will continue under the Ishiba Cabinet.

Although he did not explicitly state that he would promote Web3.0, Prime Minister Ishiba wrote in his policy document prepared during the presidential election that in "Regional Revitalization 2.0," which focuses on regional development, "we will utilize blockchain technology and NFTs to revalue and maximize the diverse analog value of regional areas, such as food and tourism experiences, at global prices."

This shows a positive attitude toward the use of blockchain to promote digitalization and create "regions with zero digital divides" and "digital regional cultural cities."

Minister Taira also serves as the chair of the LDP's "PT on the evolution and implementation of AI," so there is a possibility that progress will be made in AI as well. Japan tends to have a low AI utilization rate among major developed countries, and is in danger of being left behind by the world. In this context, AI and Web3.0 have a high affinity, and it is expected that they will work together to create national interests.

Minister Taira's presence will be seen as important to Prime Minister Ishiba in dealing with these emerging technologies. Not only is he the most digitally-savvy person in the party, but he also has extensive knowledge in the Web3.0 field, which utilizes AI and blockchain, and has a track record of solving problems.

In particular, interest in Web3.0 has declined compared to AI, and the hurdles to its use are also high, so building a track record is important in order to increase awareness and lead to mass adoption. Better efforts in the future will likely deepen the necessity and understanding of Web3.0.

Learn about the issues and current trends surrounding Web3.0 in Japan

As such, Web3.0 is currently attracting attention from both political and technological perspectives. Given this situation, it is necessary to once again grasp the current state of the industry and what issues have been raised.

In this special feature, we will explore how Web3.0-related regulations will be discussed with the inauguration of the new cabinet, how much progress will be made, and predict the future outlook for the industry, taking into account political aspects such as the results of the House of Representatives election.

To that end, we will first explain the current situation and issues in the Web3.0 field, and then what kind of trends are expected to emerge based on that in the next section.