Japan is among the leading blockchain hubs in Asia, and arguably, the world. Its embrace of blockchain technology is one to be emulated by any country wishing to adopt blockchain holistically.
Blockchain technology enables the unlocking of digital value for peer-to-peer exchange. The technology decentralizes authority, distributes data and dis-intermediates digital processes.
These attributes are the appeal of blockchain technology. Many industries are adopting the technology which has the potential to improve day to day operations in these industries. Some of the significant adoptions of blockchain technology include the following industries:
- Stock and securities exchange
- Banking and Finance
- Supply chain management
- Social networking
Japan featured several technology companies in the Fortune 500 listed, with Sony and Fujitsu actively participating in the R&D of blockchain technology.
In terms of network readiness, the World Economic Forum published a Global Information Technology Report which featured Japan in the top ten countries ready for information and communication technologies (ICT adoption). The report considered affordability, skills, infrastructure, the role of government and market readiness.
Here are other noteworthy statistics on Japan:
- Japan led in the traffic to ICO listing websites globally.
- Japanese YEN accounted for around 40% of the global trading Bitcoin volume only second to the US dollar.
- Japan was also the first country that recognized Bitcoin as a legal payment option.
Adoption by Mainstream Giants
As aforementioned, companies like Sony and Fujitsu are actively participating in blockchain research and development. Having understood the benefits of blockchain, mainstream companies are developing them for tailor-made solutions essential for the future.
Fujitsu and Sony are focusing on blockchain within the education sector.
Sony partnered with IBM to utilize blockchain technology in student data management. The service targets both primary and higher education learners. The product by Sony uses the Hyperledger fabric.
Sony plans to continue pursuing blockchain for educational services.
Fujitsu opened up a blockchain Innovation centre in Brussels to accelerate the development of future blockchain applications.
Fujitsu’s centre is expected to explore blockchain technology through various collaborations to come up with even more applications for the technology.
There is a growing demand for blockchain services beyond financial technology. This ever increasing demand fueled Fujitsu to set up the innovation centre to develop solutions that will enable evolution past financial services.
On 31 Aug 2018, Rakuten, a Japanese electronic commerce and Internet company based in Tokyo, acquired a cryptocurrency exchange known as ‘Everybody’s Bitcoin.’ This marked the entry of Rakuten into the blockchain industry.
The entry of Rakuten into the blockchain industry was as a result of user demand and projected future demand for blockchain services. The company expects growth in cryptocurrency payments soon.
Rakuten is, therefore, developing cryptocurrency services that it can offer to its customers to meet the expected demand for cryptocurrency payment services.
In August it was announced by Aelf that they had partnered with Japan’s largest gift card exchange — Amaten. The company plans on using blockchain technology to evolve its next stages of growth, and by partnering with Aelf, it will allow Amaten to expand their operations internationally by implementing Aelf’s enterprise-ready blockchain platform.
Japan’s Blockchain Regulations and Standards
Part of the reason why blockchain adoption in Japan is so impressive is due to the regulatory approach the Japanese government took.
Regulatory bodies in Japan viewed blockchain objectively. They saw it as the revolutionary technology it can be and not the disruptive one that the market had advertised. The Japanese government sought to regulate blockchain in a manner that is protective and progressive to both the blockchain industry and their citizens.
For example, in Japan, a cryptocurrency exchange is considered legal once it meets the requirements set by the Financial Service Agency. The exchange is then registered to complete the process of verification.Currently there is said to be 19 registered crypto exchanges in Japan.
The progress regulations established by the Japanese government paved the way for the thriving blockchain industry that Japan is currently enjoying.
In their rules and regulations, the Japanese government made clear the following:
- Virtual currencies were defined in the set of laws regulations provided. Virtual currency exchanges were also clearly defined.
- Sales regulations for tokens were defined in their respective types. These include virtual currency type, security and prepaid card type.
- Taxation on cryptocurrencies was also clearly defined. Income from cryptocurrencies is categorized as miscellaneous income. An inheritance tax is also imposed in the case of death of the virtual currency holder.
- Anti-money laundering requirements were defined, and each virtual currency exchange service provider is required to follow these regulations under the law.
The regulations also covered border restrictions in case payments exceeding 30 million Yen are made or received.
On matters mining, there are no regulations on individual mining. However, mining schemes are treated as collective investments and are subject to regulations by the Financial Instruments Exchange Act.
It is also worth noting that in 2018, the Japan Virtual Currency Association was established. This was done to build trust in the cryptocurrency industry, especially after it was heavily damaged by the Coincheck hack.
Despite The Success- Concerns Do Remain
Blockchain adoption requires a holistic approach involving various entities. These include the private sector, the government and international bodies.
A critical challenge blockchain adoption in Japan may face in investments. Despite companies opening R&D arms for blockchain, investment in technology is significantly lower compared to countries like China. With its progressive laws, Japan lags in serious blockchain investments.
These sentiments were echoed by Maurizio Raffone, a former investment banker who is currently a blockchain expert in Japan, in the annual Rakuten Technology Conference held on Oct 2018.
“We need greater collaborative effort from government, academia, corporations and startups,” Raffone insists. “Beyond the PR exercises.” His statements show the need for all-inclusive participation.
The adoption of blockchain requires participation by all interested parties. The engagement will also fuel interest in blockchain technology by other industry players.
Japan is heading in the right direction in terms of blockchain adoption. It is arguably ahead of most countries and is setting itself as a major blockchain hub in future.
With its progressive blockchain regulations and receptiveness towards the technology, Japan will likely be a global blockchain leader.
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Disclaimer: Please only take this information as my OWN opinion and should not be regarded as financial advice in any situation. Please remember to DYOR before making any decisions.