Japan Endorses Web3 White Paper to Fuel Industry Advancement
The ruling Liberal Democratic Party’s Web3 project team in Japan has released a white paper outlining ways to support the country’s growing crypto industry, in line with Prime Minister Fumio Kishida’s initiative to promote technological advancement, known as “Cool Japan.” Rather than focusing on heavy regulation to safeguard consumers, Japan is aiming to foster a more welcoming environment for crypto after some companies left due to high taxes.
The Web3 project team has been taking an unconventional approach by developing regulatory proposals for a wide range of topics, from NFTs to decentralized autonomous organizations, without having to go through the usual bureaucratic channels. In an interview with CoinDesk Japan, Akihisa Shiozaki, the secretary-general of the party’s Web3 project team, stated that major Japanese corporations are now entering the market. For example, NTT Docomo, a Japanese mobile phone operator, has pledged to invest up to 600 billion yen ($4 billion) in Web3 infrastructure, while large financial institutions are looking to issue stablecoins.
The white paper highlights that Japan should showcase its leadership in the upcoming Group of Seven summit, where crypto will be a key topic of discussion. It suggests that the country should focus on the potential of Web3 technology and clarify its position on technology-neutral and responsible innovation. Additionally, the white paper recommends further changes to tax regulations, such as tax exclusions for companies holding tokens issued by other companies that won’t be traded in the short term. It also proposes allowing self-assessments so that investors can carry over losses for three years, and crypto should only be taxed when assets are exchanged for fiat currency.
The white paper identifies a lack of accounting standards as a pressing issue, as Web3 companies have struggled to find auditors. It suggests that ministries and agencies should support the Japanese Institute of Certified Public Accountants in developing guidelines. The white paper also recommends creating a DAO law based on Japan’s godo kaisha (a type of business similar to a limited liability company) and making changes to regulations under the Companies Act and the Financial Instruments and Exchange Act.
The white paper acknowledges that the screening process for tokens already in circulation is becoming shorter, but reviewing new tokens issued by foreign entities remains sluggish. It suggests that procedures should be more transparent, allowing issuers to present the information necessary for review. Last year, Japan passed a framework for regulating stablecoins. The new white paper emphasizes the importance of establishing a process for stablecoin registration and setting up a self-regulatory organization. It also suggests developing proposals for yen-backed stablecoins.
While large companies in Japan have expressed interest in the Web3 industry, the white paper notes that approvals for banks and insurance companies to enter the industry remain unclear, and the government should provide guidelines. Regarding non-fungible tokens, the white paper proposes public-private partnerships to establish guidelines on legal business models for fantasy sports services. It also suggests that the public and private sectors work together to sort out data and NFT rights and find ways for content holders to license NFTs legally.
The white paper recommends appointing a Web3 minister to lead policy promotion and collaboration with other countries. It proposes that Japan’s Digital Agency set up a consultation desk for local governments and business operators. Furthermore, it recommends issuing crypto visas to skilled workers and expanding the startup visa system.
Clever Robot News Desk 7th April 2023