Current status of Japan's Crypto Asset System and Strategies to Foster Web3

Prior to 2022, Japan harbored a strong image of a "Crypto Isolationist State," to the extent that executing crypto-related businesses was deemed virtually impossible due to draconian regulatory constraints. However, since the Japanese government designated the Web3 industry as a national mid-to-long-term growth strategy in 2022 and commenced wholesale regulatory overhauls, the nation has captured global attention, reinventing its image as a vanguard "Web3 Advanced Nation." Following the Mt. Gox exchange hack in 2014, Japan proactively instituted rigorous regulatory tightening. While this initially induced a short-term contraction in industry growth, it conversely provided a critical window to hammer out robust legal frameworks, thereby fostering the long-term, stable evolution of the ecosystem. Characteristically, during the FTX bankruptcy crisis in November 2022, Japan stood out globally as virtually the only jurisdiction entirely insulated from damage, owing to its early institutionalization of stringent token listing criteria and the mandatory segregation of customer assets from corporate funds. Most recently, at the sovereign level, the Liberal Democratic Party (LDP) established the Web3 Project Team (Web3 PT) under its Digital Society Promotion Headquarters, swiftly engineering an industry-friendly and stable policy environment. In light of Japan’s proactive policy implementation, numerous market participants will naturally raise fundamental queries: “Who are the substantive agents driving Japan’s Web3 policy agendas?” and “From where does the momentum to propel policies with such flexibility and velocity originate, bypassing the inherent friction of entrenched bureaucracy?” During an official delegation to Japan from June 5 to 7, Hashed Open Research convened a series of meetings with legal counsels affiliated with the Web3 PT and the Japan Cryptoasset Business Association (JCBA). This enabled the gathering of raw industry sentiment and pragmatic voices of active practitioners that could not be parsed via domestic desktop research alone. Furthermore, the delegation solidified a strong conviction that this Web3 vitalization blueprint will serve as a definitive catalyst, meaningfully shifting Japan’s national competitiveness over the next three to five years. Accordingly, this report examines the current matrix of Japan's cryptoasset policies alongside prospective regulatory frameworks slated for future introduction. By synthesizing the insights and qualitative feedback harvested during the delegation, the document projects the future trajectory of Japan’s Web3 vitalization strategies and their broader implications. Regarding the current state of cryptoasset policies, this report transcends a superficial interpretation of statutory clauses to grasp deeply entrenched industry conventions within Japan; it was compiled based on extensive expert consultations provided by specialist attorneys from prominent Japanese law firms, Nagashima Ohno & Tsunematsu and Atsumi & Sakai.