Japanese Technological Renaissance – How Japan is Reclaiming Its Position as a Leader through Blockchain and Crypto
A Quiet Revolution
Since the bursting of the economic bubble, Japan has long been perceived as a country mired in stagnation. Extreme social problems, led by a catastrophically aging population, along with growing economic challenges, seemed to point toward inevitable decline. And while many of these problems are real, this image is far from the full truth. Japan remains a technological hub of modernity—a country where the subway runs with the precision of an atomic clock, robots manage hotel receptions, and groceries are delivered by autonomous drones directly to your doorstep within minutes. More importantly, what sets Japan apart goes beyond technology: its people. The Japanese society as a whole demonstrates a remarkable openness to modern solutions, regardless of age, creating fertile ground for innovation rarely seen elsewhere in the world.
While many countries, such as Poland, view cryptocurrencies and blockchains with distrust, Japan sees them as an opportunity to rebuild its economic position. Poland is still grappling with a lack of coherent regulations and investor-friendly conditions. High taxes and unclear guidelines often drive potential innovations abroad. Meanwhile, Japan demonstrates that innovation can coexist with responsible regulations. The introduction of clear rules, such as those governing stablecoins and NFTs, allows for both investor protection and the development of cutting-edge technologies. As a result, blockchain not only supports traditional sectors such as finance and real estate but also becomes a tool for social transformation, such as tracking eco-friendly products or managing recycling initiatives. Sure, one can dislike blockchains—like some Polish policymakers who fail to understand them or fear cryptocurrencies—but they are an undeniable fact, just as blockchain and Web3 are essentially the foundation of the modern world and the cornerstone upon which the near future will be built. Ignoring reality is unwise.
For Japan’s policymakers, blockchain technology is not just a response to contemporary challenges but also a foundation for the country’s future. Through its applications, the nation can more effectively tackle demographic and economic issues. From more efficient resource management to supporting ecological initiatives to opening new markets—blockchain is becoming the key to digital transformation. Japan sets standards that could become a model for the rest of the world, proving that responsible regulation and innovation can work hand in hand to build a modern economy. And as we all know, those who lead have the chance to reap the greatest benefits. The latecomers? Eternal complainers who let opportunities slip through their fingers while they… come up with excuses (the external reasons complainers find are endless).
A Quick History of Crypto in Japan
2014: The Mt. Gox Collapse – A Turning Point for Cryptocurrencies in Japan
The history of cryptocurrency regulations in Japan began under the shadow of one of the industry’s largest scandals. In 2014, the Mt. Gox exchange, which at the time handled about 70% of global Bitcoin transactions, declared bankruptcy after losing more than 850,000 Bitcoins, valued at $450 million at the time. This event not only shook the market but also highlighted the enormous risks associated with the lack of regulations in a rapidly evolving industry. Japanese authorities recognized the need for a legal framework to protect investors and prevent similar incidents in the future.
2017: Pioneering Regulations for Crypto Asset Exchange Service Providers (CAESPs)
In 2017, Japan became the first country in the world to grant cryptocurrencies official status as a means of payment while introducing regulations for Crypto Asset Exchange Service Providers (CAESPs). The Payment Services Act (PSA) required all entities operating in this industry to register with the Financial Services Agency (FSA). Operators were required to meet strict standards, including storing assets in "cold wallets" (offline), implementing anti-money laundering (AML) procedures, and safeguarding customer funds against company bankruptcy.
This approach earned Japan a reputation as a leader in the secure and transparent management of cryptocurrency markets. Companies such as bitFlyer and Coincheck became global examples of adapting to regulatory standards.
2022: The Evolution of Regulations: Stablecoins, ICOs, and NFTs
Japan did not stop at initial regulations. In 2022, the government passed amendments to the PSA, introducing rules for stablecoins. The new regulations required stablecoins to be tied to traditional currencies such as the yen and could only be issued by licensed financial institutions like banks or money transfer agents.
At the same time, Japan took steps to regulate Initial Coin Offerings (ICOs), establishing transparency and security rules for investors. Regarding NFTs (non-fungible tokens), Japan adopted a moderate approach, treating them as outside financial regulations unless they offered investment functions, such as dividends. This allowed the NFT market—encompassing digital art and blockchain-based games—to grow dynamically.
Investor Protection: The Core of Japan’s Approach
A cornerstone of Japan’s regulations is its strong focus on investor protection. Regulations require cryptocurrency exchanges to conduct regular audits and store at least 95% of client assets in cold wallets. In response to previous scandals, such as the 2018 Coincheck hack, the FSA conducted strict inspections and even temporarily suspended companies that failed to meet safety standards.
Japan in Comparison with Other Countries (Including Poland)
While many countries worldwide are still grappling with regulatory chaos or distrust toward cryptocurrencies, Japan stands as a beacon in this field. Its balanced approach shows that innovation and user safety can go hand in hand. The Regulatory Sandbox, introduced in 2018, exemplifies openness to experimenting with new blockchain technologies in controlled environments without full regulatory compliance. This space allows companies to test new solutions without the fear of immediate legal restrictions, stimulating development and attracting innovators globally.
Japan vs. China: A Contrast in Approaches
An example of a starkly different approach is China, which in 2021 imposed a total ban on cryptocurrencies, including mining, citing the need to protect financial stability and combat crime. Instead, China focused on developing its own central bank digital currency (CBDC). This effectively excluded private players and innovative blockchain projects, slowing the sector’s growth in the region. Meanwhile, Japan’s balance between regulation and the freedom to create new technologies has not only fostered domestic initiatives but also attracted foreign investors and talent.
Japan vs. the USA: Clear Differences in Priorities
The United States, while considered a technological leader, has a highly varied approach to cryptocurrencies, often depending on individual states. The lack of a coherent federal policy and lengthy legislative processes force investors and companies to operate amidst uncertainty. Additionally, disputes between regulators like the SEC and CFTC further complicate matters. In contrast, Japan implemented clear regulations as early as 2017, providing stability and predictability crucial for industry development. It’s worth noting that the regulatory uncertainty in the U.S. has already led to the collapse of several major blockchain projects (e.g., Libra/Diem, Ripple (XRP), TON, Basis).
Poland and Similar Countries: Conservatism as a Barrier to Development
Compared to Japan, Poland unfortunately lags behind global trends. Cryptocurrencies in Poland are still viewed with significant skepticism, and their regulations (if they exist) are unfriendly to investors and businesses. High taxes on cryptocurrency profits, a lack of clear legal guidelines, and minimal support for technological innovations mean that Polish investors and startups increasingly move their operations abroad. Poland, like many other countries in Central and Eastern Europe, seems to ignore the fact that blockchain and cryptocurrencies are not a fleeting trend but a foundation of the modern economy. A lack of investment in this technology not only represents a missed opportunity to develop the local market but also delays the adoption of a technology that will inevitably become mainstream.
Blockchain is Transforming Japan’s Economy
In Japan, blockchain is not just a buzzword but a practical tool of economic transformation that is reshaping entire industries. One of the most exciting examples is its application in finance, where traditional business models are giving way to new, more efficient solutions. In 2020, Nomura (野村) Holdings, one of Japan's largest financial institutions, introduced the first blockchain-based digital bonds. Through the ibet platform, developed in collaboration with the Nomura Research Institute, investors gained the ability to track bond ownership in real time—something previously highly challenging. This innovation not only streamlined bond management processes but also enabled closer relationships with investors by offering loyalty bonuses, such as discounts in everyday settings like coffee shops.
Blockchain technology has also opened the door to the tokenization of real estate, allowing for easier investment in fractional ownership of buildings or development projects. The ibet platform facilitates secure transactions and transparent asset management, revolutionizing the real estate market. This enables investors to easily acquire shares in large projects while companies reduce operational costs and enhance efficiency.
But blockchain in Japan extends beyond finance. Examples of its application can also be found in trade and logistics. Blockchain platforms enable the tracking of products throughout the supply chain—from the producer, through the distributor, to the retailer. For instance, blockchain can verify the origins of agricultural products or certified organic teas from Shizuoka. By scanning a simple QR code, consumers can learn about the conditions in which the products they consume were grown. This builds trust in product quality and provenance, which is particularly crucial in Japan’s demanding market.
In international trade, blockchain simplifies customs processes, reduces the risk of errors, and accelerates the movement of goods. The ability to create immutable records—one of blockchain’s fundamental and most important features—for trade documents like invoices or shipping manifests helps companies avoid disputes and save time. In logistics, blockchain enables monitoring of transportation conditions, such as the temperature in cold storage, which is essential for perishable food or pharmaceutical products.
Blockchain in Japan is no longer the future—it is the present, transforming the economy. From finance and real estate to trade and logistics, this technology demonstrates that innovation can not only improve efficiency but also build trust and introduce entirely new business models that were unattainable in the traditional economy.
Web3 – Japan’s National Strategy
Web3 in Japan is part of a broader national strategy that aligns with the vision of Prime Minister Fumio Kishida. Under his leadership, the administration designated Web3 development as one of its economic priorities, recognizing it as a cornerstone for the nation’s digital future. In 2022, a special Web3 Project Team was established to not only promote blockchain technology but also create regulatory frameworks that protect consumers while fostering innovation. The results were groundbreaking legal changes concerning stablecoins, NFTs, and decentralized finance, solidifying Japan’s position as a global leader in this field.
This vision has been greatly supported by the involvement of Japan’s largest corporations, such as Sony, Mitsubishi UFJ Financial Group, and Toyota. These companies not only invest in blockchain technology but also actively implement it in practical applications. For instance, Sony’s Soneium project—a digital ledger system—has become the foundation for new solutions in finance and entertainment. Sony’s collaboration with Circle, one of the world’s largest issuers of stablecoins, has opened new opportunities in decentralized technologies, combining creativity with advanced financial infrastructure.
Equally impressive are the efforts of Mitsubishi UFJ Financial Group, Japan’s largest bank, which is developing its own stablecoins and implementing blockchain technologies in asset management. Toyota, a leader in the automotive industry, is experimenting with blockchain in supply chain management and integrating Web3 technologies into the intelligent systems of its vehicles. These initiatives show that Web3 in Japan is not merely experimental but a fully-fledged component of the national strategy with the potential to transform the economy, business, and everyday life.
NFTs in Culture, Entertainment, and Tourism
NFTs (non-fungible tokens) have gained popularity as unique digital ownership certificates that change how we perceive and store valuable items and content. In Japan, their role goes far beyond the realm of collectibles, entering the worlds of tourism, culture, and entertainment, unlocking entirely new opportunities for local communities and the creative industry.
In tourism, NFTs are used as modern souvenirs, transferring the value of physical items into the digital realm. Imagine visiting the famous temple complex in Kyoto, where instead of a traditional ticket, you receive an NFT that not only confirms your participation but also grants access to exclusive content, such as virtual tours of normally restricted areas or interactive historical presentations. This is not only a modern form of memorabilia but also a way to build connections with visitors, who can revisit these memories through their digital assets.
NFTs also play a crucial role in promoting local culture and regional products. With this technology, local producers and artisans can prove the authenticity of their goods and present their stories to a global market. For example, tea plantations in Shizuoka can issue NFTs verifying the organic origins of their leaves, enhancing customer trust and strengthening their brand. Additionally, NFTs enable artists and creators from smaller regions to reach a global audience by offering unique digital artworks or access to local cultural events in ways previously impossible.
This blend of technology, tradition, and innovation makes NFTs a transformative tool in areas that once seemed distant from the digital world. Through them, Japan not only preserves its rich culture but also brings it into the 21st century in ways that captivate both locals and international visitors.
Blockchain and Environmental Protection
Blockchain technologies are becoming increasingly important tools in achieving ESG (Environmental, Social, Governance) goals, offering transparency, reliability, and precise data tracking capabilities. In Japan, where environmental care and sustainable development play significant roles, blockchain is applied in projects that promote more ecological and responsible economic practices.
One of the most compelling examples is an initiative by Aeon Co., Ltd., a Japanese retail giant. The company used blockchain to track the recycling of plastic bottles collected in coastal areas of the Philippines. From this recycled plastic, high-quality quilts were produced, with their origins verifiable through decentralized technology. Consumers can be assured that the product genuinely comes from recycled materials, building trust and raising awareness about global environmental issues.
Blockchain also plays a key role in financing ecological projects, such as issuing green bonds. JPX Market Innovation & Research, a subsidiary of the Tokyo Stock Exchange, developed a blockchain-based platform that enables precise monitoring of renewable energy generation. The tokenization of green bonds allows investors to support eco-friendly projects, such as wind or solar farms, while ensuring that funds are spent according to their intended purpose.
Looking Ahead at Japan’s Future
Despite impressive achievements in regulating and adopting blockchain technology, Japan still faces significant challenges that could shape the future of its cryptocurrency market. One of the most pressing issues is the high taxation of cryptocurrency profits. For individuals, the tax rate can reach as high as 55%, significantly exceeding the 20% rate for traditional capital investments.
At the same time, the government, led by reformers like Prime Minister Fumio Kishida, recognizes the need for change. One step in this direction is a review of regulations for cryptocurrency intermediaries. Current laws require such entities to meet strict standards, which can discourage small firms and startups. The proposed changes aim to simplify requirements, especially for companies acting as "introducers" (intermediaries that do not handle financial assets). Such flexibility could open doors for new market players and increase the sector’s innovative dynamism.
Facilitating the creation of blockchain companies is another key element in the future of Japan’s cryptocurrency market. The complexity of the licensing process and high market entry costs limit the development of new businesses. However, initiatives like the Regulatory Sandbox, which allows innovative blockchain projects to be tested without full compliance with regulations, demonstrate that Japan is striving to create a more conducive environment for technological experimentation. Further changes in this direction could attract both domestic and international entrepreneurs, making Japan a global leader in Web3.
The Japanese Model as a Blueprint
Japan’s approach to managing the cryptocurrency and blockchain market is a unique example of balancing stringent regulations with active innovation promotion. By establishing clear legal frameworks, the country not only ensures the safety of investors and users but also creates space for groundbreaking technologies. The transparency and legal protections offered by Japan’s regulations build trust in the cryptocurrency market while eliminating the chaos and uncertainty often associated with less regulated markets.
The benefits of this approach are evident for both investors and end-users. The requirement for digital asset service providers to register and comply with strict security controls reassures users that their funds are protected against fraud or hacking. Simultaneously, initiatives such as yen-linked stablecoins or asset tokenization introduce new possibilities for investors, fostering innovative business models and financial management methods.
Japan’s consistent efforts in building its legal and technological infrastructure also have a global impact. By setting standards for safety, user protection, and stablecoin management, Japan has become a point of reference for other countries looking to regulate their cryptocurrency markets. These standards resonate in international discussions and shape the global approach to cryptocurrencies and blockchain technology.
The Japanese model is not just a response to the challenges of the modern financial market but also an inspiration for the world. It demonstrates that responsible regulation and innovation can not only coexist but also reinforce each other, laying the foundations for a digital future.
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未開 ソビエライ
An enthusiast of Asian culture with a deep appreciation for the diverse philosophies of the world. By education, a psychologist and philologist specializing in Korean studies. At heart, a programmer (primarily for Android) and a passionate technology enthusiast, as well as a practitioner of Zen and mono no aware. In moments of tranquility, adheres to a disciplined lifestyle, firmly believing that perseverance, continuous personal growth, and dedication to one's passions are the wisest paths in life. Author of the book "Strong Women of Japan" (>>see more)
Personal motto:
"The most powerful force in the universe is compound interest." - Albert Einstein (probably)
Mike Soray
(aka Michał Sobieraj)
未開 ソビエライ
An enthusiast of Asian culture with a deep appreciation for the diverse philosophies of the world. By education, a psychologist and philologist specializing in Korean studies. At heart, a programmer (primarily for Android) and a passionate technology enthusiast, as well as a practitioner of Zen and mono no aware. In moments of tranquility, adheres to a disciplined lifestyle, firmly believing that perseverance, continuous personal growth, and dedication to one's passions are the wisest paths in life. Author of the book "Strong Women of Japan" (>>see more)
Personal motto:
"The most powerful force in the universe is compound interest." - Albert Einstein (probably)
Mike Soray
(aka Michał Sobieraj)
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