Bitrabo Editorial
Japan is looking into implementing tax reforms specifically designed to support startups in the Web3 industry, as announced by the Minister of Economy, Trade and Industry, Takeru Saito, on August 28, 2024.
Focus on Startup-Centric Tax Reforms for Web3 Growth
The push for startup-centric tax reforms in Japan aims to facilitate the growth of the Web3 industry by creating a more favorable environment for businesses in this sector. In a statement at the WebX Conference, Saito highlighted the significant potential of Japanese Web3 and blockchain enterprises.
Emphasizing the need for positive tax reforms, the minister stressed the importance of establishing an ecosystem that would attract both businesses and developers globally to Japan. Prime Minister Fumio Kishida echoed Saito’s sentiments during the WebX 2024 opening ceremony.
Kishida emphasized the role that Web3 and blockchain businesses could play in addressing various societal issues in Japan. By implementing appropriate tax and legal reforms, startups in the Web3 sector would have improved access to funding, ultimately contributing to the creation of new employment opportunities in the country.
Furthermore, the Japan Blockchain Association (JBA) had previously requested tax reductions on crypto assets in July 2023, indicating early advocacy for supportive measures within the industry.
With an eye on the future, Kishida outlined the government’s commitment to cultivating an environment conducive to the utilization of Web3 tokens, blockchain-based instant payments, and rejuvenating the content industry. Future policies surrounding the Web3 industry will prioritize user protection as a central aspect.
Notable progress toward accommodating crypto startups was witnessed in September 2023 when the Japanese government unveiled measures allowing startups to receive investments in cryptocurrency.
Challenges in Regulation Persist in Japan
Despite the positive outlook presented at the WebX Conference, regulatory hurdles concerning digital currencies continue to pose challenges for Japan’s crypto ecosystem.
For example, in July 2024, the prominent crypto exchange gate.io ceased its operations in Japan, citing compliance with financial regulations across different jurisdictions, indirectly referencing the strict regulations in Japan aimed at combating money laundering and terrorism financing.
The stringent cryptocurrency regulations in Japan are substantiated by incidents such as the hack of DMM Bitcoin, a major Japan-based cryptocurrency exchange, in May 2024, resulting in a loss of $305 million in Bitcoin (BTC).
Conversely, recent indicators suggest growing institutional interest in Bitcoin within Japan. In June 2024, a joint survey by Nomura Holdings and Laser Digital Holdings showed that 54% of respondents, including investment managers from family offices and public interest corporations, expressed interest in entering the digital assets market within the next three years.