Lawmakers from Japan's governing Liberal Democratic Party are hard at work developing a range of policies aimed specifically at fostering Web3 projects by clarifying relevant laws and regulations. This work continues Japan's progressive approach to regulating digital assets to best position the country to capitalise on growth and opportunity arising from Web3 businesses.
In an interview with Coindesk Japan, Japanese congressmen Masaaki Taira and Hideto Kawasaki said:
We would like to grasp the current situation in areas other than decentralized autonomous organizations and identify new important points for policy
Japan has been a pioneer in establishing robust consumer protections and attractive regulation for Web3 for some time. In 2020, Japan enacted amended legislation regulating digital assets, after it became one of the first countries to establish a regulatory framework for cryptocurrency exchanges following the collapse of the Mt Gox exchange. Those reforms have faired well with Japanese customers of FTX Japan recovering their assets in full shortly after the collapse of the now defunct exchange owing to strict custody and segregation rules under local law.
Last June, Japan introduced stablecoin legislation becoming one of the first jurisdictions in the G20 to roll out its framework. Also in 2023, Japan's central bank, the Bank of Japan, released a report detailing experiments it undertook using a Central Bank Digital Currency (CBDC).
In April 2023, the Liberal Democratic Party of Japan set up a Web3 project team called web3PT which committed to discussions with the aim of developing various Web3 projects using blockchain technology. The group also released their own Whitepaper which is under ongoing development.
At the end of 2023, web3PT hosted a Decentralised Autonomous Organisation (DAO) hackathon aimed at creating an environment where stakeholders and interested parties could express what they want to see from policymakers, like Hideto Kawasaki.
Through the hackathon, both short-term issues and medium to long-term issues became clear
While other jurisdictions, such as the United States and to a lesser extent Australia, have been slow to introduce fit-for-purpose laws and policies with respect to Web3, the Japanese government is taking significant steps to implement robust policy to attract investment and business. In common with a number of Asian jurisdictions like Hong Kong, Singapore and Korea, Japan has taken a proactive approach to harness the benefits of Web3 technology while addressing consumer protection concerns. These policies have also provided a regulated pathway to the further development of Web3 technologies helping to keep and attract talent in a competitive global technology space.
By Michael Bacina, Steven Pettigrove and Luke Misthos
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