Japanese Prime Minister Backs Blockchain Potential

Fumio Kishida, Japan's prime minister, has come out in favor of blockchain as a potential answer to the nation's technological struggles.

Japan’s Financial Services Agency (FSA) recently lifted a ban on stablecoins, paving the way for new regulations in the summer. This is one of many clear signs of the nation’s intention to adapt to a more crypto-friendly future. 

The Future Of Blockchain In Japan

Masaaki Taira, a Liberal Democratic Party official, raised questions about the potential of blockchain adoption, to which Kishida stated there were "various possibilities for using Web3" in Japan. He also indicated that the Japanese government might introduce certain aspects of the blockchain space, such as non-interchangeable tokens (NFTs) and self-governing decentralized bodies (DAOs) as part of plans to regenerate neighborhoods and put forth 'Cool Japan' - a domestic policy to introduce Japan's creative ideas and civilization to other areas of the world.

Kishida hopes that through the power of Decentralized Autonomous Organizations (DAOs), those enthusiastic about similar social issues can be brought together under a newly created banner and form a collective. Producers may also use non-Fungible Tokens (NFTs) to broaden their income stream and retain supremely dedicated followers.

Web3 offers great potential, but Japan’s governmental representatives hope to introduce other aspects of blockchain technologies already prevalent in other crypto-friendly nations. The proliferation of crypto exchanges and domestic investment in recent years has led to numerous blockchain-based companies and an increasingly diverse array of products—including lending products and crypto debit cards. 

We have seen a rise in the number of alternative crypto-based businesses. Ikasaman is a cryptocurrency-enabled Japanese casino site and a prime example of ways crypto is being implemented and influencing other industries. 

Digital Yen

We recently saw the deputy director-general of the Financial Services Agency’s Strategy Development and Management Bureau of Japan has requested increased regulations on digital currency similar to those imposed on banks. The following is a statement from the Japanese government in November last year, laying out plans for introducing the digital yen.

While the government isn’t certain about its implementation, the Japanese Central Bank (CBDC) and the Bank of Japan (BoJ) have begun a collaboration with three megabanks and regional banks to pilot the currency in the spring of this year. 

The hope is that the BoJ will cooperate with established financial institutions and organizations to isolate and resolve any potential issues with the introduction of digital currency in Japan.

Coinbase Pulls Out Of Japan

Despite the positive direction Japan is going about crypto adoption, and there have been a few hiccups. The latest comes as major crypto exchange Coinbase (COIN) halted its operation in Japan, citing “market conditions” and stating that it would close shop in the country as of February 16th.

The company is based in San Francisco, so this isn’t a major concern for investors and crypto evangelists. However, the reason for doing so could be cause for concern. Coinbase entered the Japanese market in the summer of 2021, following in the footsteps of US exchange rival Kraken at the height of the crypto boom. 

But, due to a lack of trading volume, there was little benefit in keeping the business operational in Japan. The collapse of FTX had a huge effect on global trading volumes and cast a shadow over crypto businesses run by Americans, with Celsius and BlockFi also folding under market pressure. As such, it’s likely many Japanese investors are now favoring Japanese-based exchanges to invest and trade their digital assets.