Nearly six years have elapsed since Annie and I wrote Japan Bitcoin #1. Way back in 2017, Japan accounted for more than 50% of bitcoin trading worldwide. As we all know, this phenomenon proved transitory. In our book we described the myriad of factors contributing to Japan’s bitcoin volume, among which was the learning experience afforded by the hack of Mt.Gox three years earlier, which served as a dry run for constructive regulation, first for bitcoin, and subsequently for cryptocurrencies in general.
Paradoxically, it was a second hack, that of the CoinCheck exchange in 2018, that ushered in a far stricter set of regulatory policies which subsequently pushed most of Japan’s crypto innovation offshore.
Yet we are living in an era of inflection points in Japan these days, and this past week’s release of an encouraging whitepaper on Web3 may represent another one. Here’s an excerpt:
There is always a great deal of uncertainty involved in implementing policies related to new industries and technologies. This is even more so when there are no precedents to serve as a reference, or no examples by other countries to benchmark against. However, we should not allow our fear of policy failure or concern over potential side effects, to ruin our chances for future economic growth, the kind of which that arrives only once every few decades. Politicians must take responsibility to correctly estimate risks and promote responsible innovation in the Web 3.0 era with a determination to move forward even if the circumstances do not guarantee zero risk.
In stark contrast to the confusion in America, Japan seems to recognize the opportunity of crypto, provided that proper guard rails are in place. Some critics argue that Japan’s crypto regulation is excessively burdensome, they’ve proven effective at protecting retail investors. As Emily Parker points out in her interview on CoinDesk, Japan represented the only major jurisdiction in which retail customers recovered their funds from the FTX fraud. Moreover, the rules are refreshingly clear. Market innovators tend to appreciate regulatory clarity.
As for crypto regulation in the U.S. meanwhile, without naming names, it sometimes feels like Toonces is at the wheel.
