In a statement on August 28, 2024, Japan’s Minister of Economy, Trade and Industry, Takeru Saito, announced plans to boost the country’s Web3 ecosystem through tax reforms aimed at supporting startups.
Fostering Growth in the Web3 Industry Through Startup-Centric Tax Reforms
To drive growth in Japan’s Web3 sector, the government is considering implementing tax reforms specifically tailored to support startups and facilitate their expansion. Speaking at the WebX Conference, Saito highlighted the vast potential of Japanese Web3 and blockchain companies.
He emphasized the crucial role of favorable tax reforms in creating an environment that would attract businesses and developers globally to Japan. Prime Minister Fumio Kishida echoed Saito’s sentiments.
During the opening ceremony of WebX 2024 via video message, Kishida expressed the belief that Web3 and blockchain enterprises could contribute significantly to addressing various societal challenges in Japan. By implementing sensible tax and legal changes, startups in the Web3 industry would have better access to funding, thereby creating new job opportunities in the country.
In July 2023, the Japan Blockchain Association (JBA) petitioned Japanese authorities to reduce taxes on crypto assets, reflecting a proactive approach toward fostering a conducive environment for Web3 and blockchain innovation.
Kishida highlighted the government’s commitment to enabling the use of Web3 tokens, implementing blockchain-based instant payments, and revitalizing the content industry. Future policies related to the Web3 sector will prioritize user protection as a central pillar.
A noticeable shift in Japan’s stance towards crypto startups was witnessed in September 2023 when the government announced measures allowing startups to receive investments in cryptocurrency.
Navigating Regulatory Challenges in Japan
Despite Japan’s dedication to advancing its Web3 industry, regulatory hurdles surrounding digital currencies remain a significant concern for the country’s crypto ecosystem.
As evident in July 2024, leading crypto exchange gate.io ceased operations in Japan, citing compliance with financial regulations as a priority, alluding to the stringent rules surrounding cryptocurrency due to concerns of money laundering and terrorism financing.
Japan’s rigorous cryptocurrency regulations are justified by incidents like the hacking of DMM Bitcoin, a major local exchange, in May 2024, resulting in a substantial loss of $305 million worth of Bitcoin (BTC).
On a positive note, institutional interest in Bitcoin appears to be rising in Japan, as highlighted by a joint survey in June 2024 conducted by Nomura Holdings and Laser Digital Holdings, indicating a growing inclination towards the digital assets market among investment managers and corporations.
Featured image from Unsplash, Chart from TradingView