‘Crypto tumult in the US may be a boon for Japan’ says The Japan Times
As the U.S. crypto industry faces a prolonged winter, Japan may find an unexpected opportunity to expand its influence in the sector — according to a recent The Japan Times report.
The recent collapse of FTX, once a leading global virtual token exchange, has sparked concerns about a similar downturn in other countries, including Japan.
However, some Japanese industry insiders see the U.S. turmoil as a chance for Japan to enhance its standing in the crypto world, given its established legal framework for the industry.
Japan was an early adopter of crypto legislation, and its robust regulatory approach has been shaped by past experiences with major crypto exchange failures, such as Mt. Gox and Coincheck.
The country’s laws require cryptocurrency exchanges to register with the government, submit annual reports, and comply with stringent measures to prevent money laundering and terrorism financing. These regulations initially faced criticism for being overly strict, but they have since proven their worth by protecting investors during the FTX debacle.
The U.S. crypto industry has been rattled by recent actions from the Securities and Exchange Commission (SEC), which has ramped up its crackdown on the sector. The SEC has filed lawsuits against two of the world’s largest crypto exchange operators, Binance and Coinbase, on various charges, including the unregistered offer and sale of securities. This has cast a cloud of uncertainty over the future of the U.S. crypto industry.
Despite the U.S. crackdown, Japan’s crypto sector remains optimistic. Noriyuki Hirosue, head of Tokyo-based cryptocurrency exchange Bitbank and chair of the Japan Cryptoasset Business Association, believes that the U.S. regulatory tightening will not necessarily be replicated in Japan.
Japan has also introduced a legal framework for stablecoins, virtual tokens whose values are often backed by traditional fiat currencies or commodities to maintain stable prices.
The revised Payment Services Act, which came into effect recently, allows the use of registered stablecoins for payment. This has positioned Japan ahead of other countries in terms of stablecoin regulations, according to Noritaka Okabe, chief of JPYC, a Tokyo-based startup that issues its own stablecoins.
However, Japan still faces challenges, such as making tax rules more business-friendly. Currently, profits from the sale of virtual currencies are considered miscellaneous income for individuals, with the maximum tax rate set at 55%, compared with the fixed 20% rate for capital gains and dividends from stocks.
Despite these hurdles, Japan is attracting global attention with more international crypto-related conferences taking place in the country. As the government promotes web3, a term referring to decentralized web services with blockchains, non-fungible tokens, and crypto assets as key elements, Japan is poised to facilitate innovation in the crypto sector.
