Awaiting the dawn of Japan's cryptocurrency industry: What are the challenges of national onboarding?　Crypto Journey Special Edition

The summer in Dubai exceeds 40 degrees. To avoid the scorching heat, many people travel to their home countries or summer resorts in the summer. Therefore, airports are more crowded than usual in July. I am one of those people who returned to Japan for the first time in a long period in search of coolness. My impression immediately after returning home was "Isn't Japan hot enough?" The physical sensation is not much different.

Looking at the maximum temperature, it is probably about +5 degrees, but just as the temperature range of a sauna is about 5 degrees, the human body probably feels the same when the temperature exceeds a certain level. The other day, I pre-ordered a book and bought it. "Gourmet Culture: What the World's Greatest Gourmet Knows" is a book written by Takefumi Hamada. Hamada's career is interesting. He is a crazy person who has traveled to 127 countries and regions around the world, from Antarctica to North Korea, and visits the world's 50 best restaurants and Michelin restaurants around the world every year.

I don't know if I can call myself a foodie, but I am undoubtedly one of those people who travel for food. It's a funny story now, but when I went to Fukuoka for my university entrance exam, I took a gourmet book instead of a reference book and went around to B-grade gourmet restaurants and ramen shops. There were more sticky notes on the gourmet book than on the reference book, and I enjoyed reading the book more. In the past, I had a slight experience where I had a big fight with a girl I was dating because there was a restaurant I really wanted to go to while traveling, and we waited for 8 hours for the restaurant.

As an adult who has had experience in cultural exchange through food, mainly in Europe, through various connections, I think that Hamada's book dissects the definition of gourmet food in a very easy-to-understand way, and also beautifully puts into words the ineffable feelings that many gourmets probably feel, making it a book that can be called a philosophy of food.

Looking back on this year, I have already visited 10 countries. In July, I was touring various Asian countries every week. Now that the yen is at its peak of strength, I feel nostalgic, but until just a month ago, the yen was weak, and it was especially difficult when I visited Europe. I think it is very rare for ordinary people to travel abroad so much during such a weak yen.

Recently, I visited Hong Kong and had lunch and dinner at a Michelin restaurant. Both courses included a whole sea cucumber, which I'm not very good at. It was quite a challenge. I shiver when I think about eating two whole sea cucumbers in one day. I was also served bird legs that I didn't know how to eat, strange shellfish, and mysterious fruits. Being welcomed through food in a place I visit is the easiest way to communicate, but it can also upset your stomach. Cultural exchange through food is surprisingly hard, and you would not be able to endure it without intellectual curiosity. It also made me keenly aware that my stomach is a limited asset.

Pride in being Japanese

I have a long experience abroad, but recently I have been thinking strongly about something. It is the pride of being Japanese. I don't feel it much when I live in Japan, but when I step outside, there are various moments when being Japanese moves my heart.

Just as many people have experienced being familiar with others just because they are Japanese when traveling, I feel that being Japanese means something that cannot be described in a single word, at the genome level. Just like past great people, there are many Japanese people who are active on the world stage, such as Shohei Otani and Takefusa Kubo, especially in the sports world. At the Paris Olympics, representatives from 203 countries competed. From the perspective of the gold medal ranking, Japan came in third after the United States and China. How can a small country of only 120 million people, which is not physically superior, compete so well on the world stage? I think we need to be more aware that the Japanese are a people who can compete globally.

Going back to the gourmet food at the beginning, Japan is also amazing when it comes to food. When I come back to Japan and travel around mainly Japanese food, I often find myself impressed by the delicate expressions of the chefs. Sushi is now commonly eaten all over the world, but according to one theory, the mass adoption of sushi was greatly accelerated when a Japanese trading company taught salmon farming techniques in Norway.

Nowadays, land-based aquaculture, where flounder is farmed in the pools of abandoned schools, has become mainstream, and we can now eat delicious fish regardless of the season. The fact that there are about five major ocean currents around the Japanese archipelago is also a major reason why seafood is abundant and delicious fish can be caught. I saw a video where many Michelin-starred chefs were asked where they would like to live after retirement, and the most common answer was Tokyo. That shows how excellent Japan is in terms of food worldwide. Furthermore, Japan's technological capabilities are also world-leading in the fields of quantum computing, artificial intelligence (AI), biotechnology, and space-related fields, and the same can be said even in the crypto industry in which I work.

Satoshi Nakamoto, who is said to be the creator of BTC, proposed the concept of BTC in 2008. Why does he have a Japanese name? Did it have to be a Japanese name? His true identity remains a mystery, but one thing is certain: it all started with one of his papers.

After Satoshi Nakamoto disappeared in 2010, Japan was the world's largest market for BTC trading. The main player in this was Mt. GOX. In 2014, it became the world's largest BTC exchange. At the time, it is said to have accounted for about 70% of BTC trading volume. After a hacking incident, the Japanese government strengthened regulations on crypto assets and introduced the world's first licensing system for crypto asset exchanges in 2017.

Let's look back at the glory of the Japanese economy. From the late 1980s to the early 1990s, known as the bubble period, the Japanese stock market grew rapidly, the Nikkei average hit an all-time high, and the Tokyo Stock Exchange became the world's largest stock market. In 1989, there was a time when 32 of the world's top 50 companies were Japanese companies.

What about now? Currently, Apple is in the lead with a market capitalization of over $3.2 trillion worldwide, followed by Microsoft and Nvidia. Even Toyota, the top Japanese company, is not in the top 20.

Let's take a look at BTC's figures in Global Market Capitalization, which is the total market capitalization of companies, cryptocurrencies, and financial assets around the world. As of August, it is worth $1.2 trillion, ranking 10th after Facebook's Meta. To give a simple example, it exceeds Elon Musk's Tesla (about $600 billion).

Digital assets, which were recognized as speculation until a few years ago, have become treated as spot ETFs (exchange-traded funds) in just a few years, and have become assets that BlackRock, one of the world's largest institutional investors, offers as products to investors. This shows that cryptocurrencies have become an even more indispensable presence in the future global economy. As of 2024, the number of spot cryptocurrency ETFs is increasing worldwide, and there are a total of about 58 cryptocurrency-related ETFs.

While the cryptocurrency industry is making great strides globally, it is unfortunate to see it lagging far behind in Japan.

I feel that the Hong Kong government is serious about laying the foundations for the financial city as an international financial hub.

Last month, I went to Hong Kong for the first time in five years since the COVID-19 outbreak, and I was very surprised to see USDT and HKD being exchanged at a currency exchange shop in the middle of downtown Tsim Sha Tsui. Even in Dubai, specialized currency exchange shops quietly accept it, but here, USDT and HKD were being exchanged at the same counter where legal tender is exchanged. I was surprised when I asked the clerk to check the rate, but the fee was only about 1%. Naturally, the interest rate is better than exchanging JPY → HKD at the airport.

As I wrote in the column in the previous issue of Crypto Journey, where I interviewed a Korean company (AM Management), there is currently no tax on individuals' crypto assets in Korea. The government's recent announcement has postponed the tax for another two years. Similarly, there is no tax on individuals' crypto profits in Singapore or Hong Kong.

In Hong Kong, many technology and crypto-related companies have moved to Singapore and other places due to the COVID-19 pandemic, and in order to bring them back, the ban on crypto assets, which was temporarily lifted last year. Currently, many companies and human resources are returning to Hong Kong, and I personally feel that Hong Kong is more dynamic than Singapore. The government has also boldly announced that Hong Kong is an international financial hub as part of its efforts to attract cryptocurrency and blockchain-related businesses, and seeing the various regulations in place to solidify the foundations of the financial city, I feel that Hong Kong is serious about it.

On the other hand, what about our country, Japan? We are focusing on Web 3.0 as if to make up for the lost 30 years, but it is hard to say that the government's current policies are creating synergy.

The government has an urgent need to help domestic suppliers in Japan increase the number of branches of their services.

Recently, the JBA (Japan Blockchain Association) submitted a request to the government for tax reform related to crypto assets in 2025.

The contents are mainly four points: 1. Introduction of separate taxation and loss carryover deduction, 2. Abolition of taxation when exchanging crypto assets, 3. Improvement of tax system when donating crypto assets, 4. Continued consideration of future review of crypto assets with specific transfer restrictions. Of course, the public is interested in 1. Separate taxation.

According to the JBA, the number of crypto asset accounts exceeded 10 million accounts in April 2024. But what about the actual number? I think most people who currently use crypto assets have accounts with multiple exchanges. Taking that into account, I personally think that there are about 6 to 7 million real users, about 5% of the population of Japan.

On the other hand, what about securities accounts? The momentum of the New NISA was tremendous. According to an announcement by Rakuten Securities, the total number of securities accounts exceeded 11 million accounts alone as of April 2024. Considering that it reached 1 million accounts in just four months, the fastest since its establishment, the impact of the New NISA system is very large. The number of securities accounts in Japan, including online securities, is said to be about 45.5 million. Some people may have multiple securities accounts, but most people will only have one.

Looking at the impact of these numbers, we can see that regulatory reform is an absolute requirement to motivate the public. The tax system and regulations will not change. If you try to innovate without changing the environment, it will end in a futile effort. No matter how much effort a startup company puts in, it will end in vain.

In the case of Rakuten Securities, they increased the regular savings limit on Rakuten cards from 50,000 yen to 100,000 yen, and strengthened card services such as point awards, which will likely lead to an increase in the number of users. In Japanese thinking, if you're going to buy something anyway, you'd be happier if there were benefits such as points. What about the cryptocurrency industry? It's still just a proposal from the industry. I don't think the government will change the tax system right away for 6 million people. The association has been saying this for a long time, but I don't think it's even in the consideration stage yet.

Even though crypto is a global field, the services offered are very different when you step outside compared to Asian countries, which is proof that Japan is lagging far behind the rest of the world.

Not only the cryptocurrency/fiat currency exchange mentioned earlier, but also secured loan services that lend fiat currency against cryptocurrency, and debit card services that use cryptocurrency as a deposit are also examples. If regulations do not change, domestic suppliers in Japan will not be able to increase the number of services they offer. On the other hand, technology is accelerating exponentially toward the world of science fiction movies, as exemplified by the Apple Vision Pro.

I wonder how much the government is aware that it is taking away the opportunities for Japanese people who are skilled in creating something from scratch. It is fine to compete in existing markets, but I sincerely hope that they will consider creating unique products in new markets without competition. Being strong does not mean you are invincible. Having no enemies means you are invincible.

I look forward to the dawn of universal onboarding.

Profile

◉ Hiroki Nagatomo

Columnist

JADE VENTURES Founder

J-CAM MIDDLE EAST COO

Born in 1988. Started a business while studying at Yokohama City University. Developed multiple businesses such as a staffing agency and a restaurant, with sales promotion for a major telecommunications carrier as its main focus. After transferring his business in 2018, he traveled to more than 30 countries, mainly in Europe. Through cultural exchanges such as food, lifestyle, and socializing, he learned that wealthy people overseas are paying attention to crypto assets. Later, after meeting Mr. Niitsu, the representative of J-CAM, he launched "Bit Lending", an asset formation platform for the web3.0 era in 2022. His innovative ideas that overturn common sense have raised the industry standard of crypto lending and earned him the support of many users. He currently lives in Dubai, and while contributing to many businesses in the BizDev field of global companies with his unique network and footwork, he also interviews prominent people in the industry as a columnist.