Japan’s regulator has loosened cryptocurrency rules in the country, making it easier for exchanges to list virtual currencies upon implementation.
According to media reports, the documents distributed to crypto-related companies conveyed the regulator’s decision to loosen crypto rules as part of the country’s strategic plan to help startups compete favorably with established crypto firms. Citing Wu Blockchain on a Tweet:
“… Japan’s strict listing review has led to the lack of competitiveness of local exchanges.”
In addition, the move would also lower the entry bar for foreign enterprises and established crypto firms such as Binance to venture into the country’s market.
The development follows numerous efforts by Prime Minister Fumio Kishida to strengthen Japan’s economy through advanced technologies such as Web3, Internet-of-Things (IoT), and blockchain technology. In the past, Japan’s strict listing process fueled the lack of competitiveness of local exchanges, as the bar was too high for new market entrants.
According to a Bloomberg report on Wednesday, October 19, the Japan Virtual and Crypto Assets Exchange Association (JVCEA) compressed the screening process to a maximum of two weeks, thereby making listing virtual coins on exchanges easier. The report read:
“Once the JVCEA’s plan of relaxing token screening comes into place, exchanges should be able to list tokens within 30 days of reporting their listing plan and coin assessments, shortened to within two weeks from April.”
From the announcement, this move appears to be a tactical approach to entice crypto enterprises to set up establishments in Japan. A Bloomberg business Twitter post stated:
“Japan plans to further loosen crypto rules by making it easier to list virtual coins, potentially boosting the country’s allure for Binance and rival exchanges.”
Wu Blockchain has also opined on the matter, noting that the change will potentially take effect by December. Wu Blockchain added, “…the relaxed rule could take effect as early as December.”
It follows, however, that the privilege will not extend to tokens newly entering the Japanese market, which will, therefore, have to undergo the whole listing process. Currently, Japan’s regulatory rules only permit trading about 50 coins. JVCEC has since disclosed the possibility of eliminating the pre-screening procedure for Japan’s new coins by March 2024, including tokens issued through ICOs.
JVCEA Vice Chairman Genki Oda said the self-regulatory body might also go a step further to do away with pre-screening procedures requisite for coin listing in foreign countries come 2024, all towards revitalizing the country’s crypto asset market. He added, “We hope the latest measure will help revitalize Japan’s crypto assets market.”
This, according to Oda, would involve easing rules for tokens issued via initial coin offerings (ICO) or initial exchange offerings (IEO).
Japan Prime Minister’s Crypto-Friendly Vision
Fumio Kishida, the Japanese politician, serving as Prime Minister of the country and president of the Liberal Democratic Party (LDP), has been condemning onerous regulations surrounding crypto for a while now. His criticism of the tight rules was backed by proposals to simplify the extensive process of listing coins and prepare the playing field for foreign companies through less strenuous market entry rules.
Kishida takes credit for pushing to reduce the country’s crypto tax and its regulatory burden, as felt by crypto firms. According to reports, new crypto rules proposed by the prime minister will be implemented in 2023.
The Prime Minister has also shown interest in leveraging Web3 to enhance the country’s economic growth. According to reports, these plans involve pushing for the adoption of blockchain, non-fungible tokens (NFTs), and the metaverse.
Creating a crypto-friendly environment.
Japan’s decision to loosen crypto regulations is timely, as big exchanges have identified the significant potential in the Asian country. Among the exchanges include FTX, which secured a license to provide crypto services for its Japanese clientele in June 2022, and Binance, which has expressed plans to venture into the Japanese market after four years.
Moreover, barely a week has passed since a Web3 developer platform, SettleMint, raised $15.5 million as part of its plans to expand within the Japanese market. The crypto firm is set to “add 60 to headcount globally and start operations in Japan.” A company spokesperson said its plans to venture into Japan had been motivated by its favorable market conditions and regulatory clarity.
Beyond the regulator, the Financial Services Agency (FSA) proposed a tax break initiative for retail investors, dubbed Nippon Individual Savings Account (NISA).