Japan is currently writing a new chapter on the global Web3 stage. As a country that has been at the forefront of crypto asset regulation, its efforts extend beyond legal frameworks to building bridges between new technologies and society, drawing widespread attention both domestically and internationally. Against the backdrop of global Web3 exploration, Japan is accelerating its development. What direction is the country moving toward? What specific regulations are in place? What challenges do businesses face? This article explores Japan's Web3 landscape through three key perspectives: society and politics, enterprises, and individual users and investors.
Social and Political Developments
New Leadership Under Prime Minister Shigeru Ishiba
In September 2024, Shigeru Ishiba was elected as the new president of Japan's ruling Liberal Democratic Party (LDP). Under Japan’s political system, the leader of the ruling party typically becomes the prime minister. With Ishiba’s appointment, expectations are high that the Web3 promotion efforts initiated under former Prime Minister Fumio Kishida will continue to gain momentum.
A key figure in this transition is Masaakira平将明, a member of the House of Representatives who leads the LDP’s Web3 Project Team (Web3PT). Under the Kishida administration,平将明 was instrumental in advancing Web3 initiatives. In the new cabinet, he was appointed as the Minister of Digital Agency, a role that amplifies his influence in policy-making, especially in areas related to Web3 and digital transformation.
Web3 technology is viewed in Japan as a catalyst for new economic growth. Therefore, there is strong anticipation for clearer regulations and legal frameworks. With the new administration, policy advancements—particularly in legal clarity and enhancing global competitiveness—are expected to accelerate.
Regulatory and Tax Reforms
One of the major tax reforms in fiscal year 2024 was the exemption of corporate-held crypto assets from “period-end mark-to-market taxation.” Previously, domestic companies faced tax liabilities on unrealized gains from crypto holdings, which discouraged many from operating within Japan. This change allows businesses to focus on innovation without the burden of unrealized gains tax, making Japan a more attractive market for startups and enterprises.
Japan’s regulatory framework for crypto assets began with the 2017 amendment to the Payment Services Act, which recognized Bitcoin and other cryptocurrencies as legal means of payment. In 2020, Initial Coin Offerings (ICOs) and Security Token Offerings (STOs) were incorporated into the Financial Instruments and Exchange Act to ensure investor protection. In 2023, regulations for stablecoins were introduced, further stabilizing the legal environment for Web3.
However, tax policies for individual investors remain problematic. Crypto trading profits for individuals are currently classified as “miscellaneous income” and taxed at a progressive rate of up to 55%. This heavy tax burden, combined with complex filing procedures, has been a significant barrier for retail investors.
Minister平将明 has been vocal about the need for reform. At the WebX2024 conference, he advocated for a flat 20% tax rate on crypto gains for individuals, similar to financial income taxation. If implemented, this change could encourage broader participation in the crypto market and stimulate domestic growth.
Shift in Regulatory Attitude
Japan’s Financial Services Agency (FSA), traditionally strict with crypto regulations, has shown a notable shift in attitude. In 2024, the FSA began considering the inclusion of crypto assets under the Financial Instruments and Exchange Act. This reclassification could lead to:
- Accelerated tax reforms, reducing the burden on individuals and businesses.
- The introduction of Bitcoin ETFs, bridging traditional finance with the crypto market.
Additionally, the FSA is exploring relaxed regulations for in-game token usage, providing a more flexible environment for game developers. These changes could enhance Japan’s competitiveness in the global Web3 industry.
New Legal Frameworks and Business Opportunities
On April 22, 2024, Japan officially allowed the establishment of Limited Liability Company (LLC)-style Decentralized Autonomous Organizations (DAOs). This legal amendment grants DAOs formal legal status, enabling them to enter contracts and hold assets like real estate. The proposal, originating from the LDP’s 2023 Web3 White Paper, was implemented rapidly, drawing attention from the global blockchain community.
Key challenges addressed in the legislation included the treatment of membership tokens and information disclosure requirements. The new framework classifies certain DAO-issued tokens as “non-profit-distributing tokens” or “tokens held by executive members,” regulating them under the Financial Instruments and Exchange Act. It also allows DAOs to keep member information private.
This development opens up opportunities for community-driven projects in areas like regional revitalization, sports, and entertainment.
In February 2024, the Ministry of Economy, Trade and Industry approved a legal revision allowing Limited Partnership (LPS) funds to invest in crypto assets. Previously, LPS funds were restricted to traditional assets like stocks and bonds, forcing many Web3 projects to seek funding from overseas venture capital firms. This change is expected to diversify funding sources and activate the domestic market. If passed by the Diet, token investments by domestic venture capital firms could begin as early as 2025.
Local Government Initiatives: Tokyo and Osaka
Local governments in Japan are actively exploring Web3 applications for regional development. Examples from Tokyo and Osaka include:
- In Mitaka City, Tokyo, a collaboration with FC Tokyo introduced NFTs as digital gifts for hometown tax donations, creating a new form of civic engagement.
- The Aogashima DAO Project aims to transform the remote island of Aogashima into a community-driven DAO, emphasizing resident participation and sustainable development.
- In Okutama City, token-based crowdfunding is being used to preserve tourism resources, funding the opening of traditional restaurants and hotels.
Osaka, host of the 2025 World Expo, is leveraging Web3 technology through the “EXPO 2025 Digital Wallet.” This platform supports cashless payments, NFT collections, and reward points, enhancing the visitor experience. Additionally, digital stamp rallies using NFTs are being introduced at local restaurants and museums, blending technology with cultural engagement.
Habitatsushi City in Osaka Prefecture has also pioneered the sale of “Digital Resident Certificate NFTs,” offering holders discounts and free services at local facilities. These initiatives demonstrate how Web3 can drive regional innovation and digital transformation.
Corporate Dynamics
Financial Sector: Sony Bank
Sony Bank has been proactive in adopting Web3 technologies. In April 2024, it announced the development of digital securities based on entertainment IP (intellectual property), allowing music, films, and games to be tokenized as financial assets. The bank also piloted a stablecoin backed by fiat currency and developed blockchain wallet technology to expand Web3 applications.
In July 2024, Sony Bank launched “Sony Bank CONNECT,” an app integrated with the Sony Group’s NFT marketplace “SNFT.” Users can view and manage their NFT collections, display them on their home screen, or exhibit them in a 3D gallery called “Rooms.” These efforts reflect Sony’s strategy to merge finance with entertainment, creating new value for users.
Gaming Industry: Sony and Square Enix
Sony Group, in partnership with Startale, launched “Sony Block Solutions Labs” to develop a Layer 2 blockchain named “Soneium.” Aimed at mass adoption, Soneium integrates Web2 and Web3 technologies, offering a user-friendly platform for developers and creators. Related projects, such as YGG Japan’s “YAIBA” Layer 3 chain for games, are already emerging.
Square Enix surprised the industry by partnering with Mysten Labs’ portable Web3 gaming platform “SuiPlay.” Although details are scarce, this collaboration highlights the potential for Web3 in traditional gaming.
Double jump.tokyo, in collaboration with Sega, is developing a new blockchain game based on the “Sangokushi Taisen” series. The game, announced at the Tokyo Game Show 2024, will incorporate NFT technology to enhance player experience.
Real Estate: NOT A HOTEL
NOT A HOTEL, a company offering shared villa ownership, raised ¥5.5 billion in 2024 to expand domestically and internationally. In October, it launched its own token, “NAC,” through an Initial Exchange Offering (IEO). Token holders can use NAC for bookings, rentals, and participation in the “NOT A HOTEL DAO,” influencing business decisions. This model exemplifies how tokenization can create participatory ecosystems in real estate.
Automotive Industry: Toyota Blockchain Lab
Toyota Blockchain Lab (TBL) is exploring the tokenization of car usage rights through “smart accounts” based on Ethereum’s ERC-4337 standard. These accounts, known as “Motion Oriented Accounts (MOA),” separate authentication from key management, enhancing security and flexibility. Users can assign permissions—like trunk access—with time limits, facilitating car-sharing services. This initiative is part of Toyota’s broader “Mobility 3.0” vision, integrating mobility with social systems.
KINTO, in partnership with Toyota, is piloting a program that issues non-transferable NFTs (Soulbound Tokens) to safe drivers based on vehicle data analysis. These tokens serve as permanent records of safe driving and could lead to discounted services in the future.
Energy Sector: Tokyo Electric Power Grid
Tokyo Electric Power Grid collaborated with Greenway Grid Global and Digital Entertainment Asset to launch “PicTrée,” a mobile game app that encourages users to photograph power poles and infrastructure. This gamified approach not only provides entertainment but also aids in early detection of equipment abnormalities, showcasing how Web3 can add social value.
Environmental Initiatives: Klima DAO Japan
Klima DAO Japan was established to tokenize Japan’s carbon credits, known as “J-Credit.” In April 2024, it launched a platform enabling individuals and businesses to participate in carbon credit trading. A trial of “KlimaDAO JAPAN MARKET” began in November, using Polygon blockchain to enhance transparency and liquidity. Participants included Mizuho Financial Group and Optage, with a public launch planned for spring 2025.
Telecommunications: NTT Docomo and KDDI
NTT Docomo’s subsidiary, NTT Digital, introduced “scramberry WALLET,” a Web3-compatible wallet that allows easy registration via phone number. Cloud-based storage and backup features enhance security, while filters protect against small-value crypto and NFT scams.
KDDI partnered with Animoca Brands Japan to sell NFTs from the blockchain game “PHANTOM GALAXIES” on its “αU market” platform. This collaboration strengthens ties between telecommunications and Web3.
Food and Beverage: Suntory and Calbee
Suntory released a limited-edition beer, “THE PREMIUM MALT’S Masters Dream,” equipped with NFC tags that generate unique NFTs upon opening. This innovation enhances customer loyalty by adding digital collectibility to physical products.
Calbee collaborated with Web3 games “CryptoSpells,” “JobTribes,” and “HEAL-Ⅲ” to introduce NFT items themed around its popular snacks “JagaRico” and “Kappa Ebisen.” This cross-promotion merges virtual and real-world experiences, engaging fans in new ways.
Watch and Apparel: Casio
Casio’s “VIRTUAL G-SHOCK” initiative, in partnership with the Web3 lifestyle app “STEPN GO,” targets Gen Z users through virtual interactions. This strategy demonstrates how traditional brands can leverage Web3 for digital marketing.
Individual Users and Investors
Growth in Exchange Accounts
On-chain data indicates steady growth in account registrations at Japanese crypto exchanges. Based on unique wallet addresses receiving funds from major exchanges (Coincheck, bitbank, bitFlyer), the number of accounts is estimated to have increased from 2.97 million in January 2024 to 3.4 million by November 2024. This represents a net gain of approximately 426,000 accounts, reflecting growing interest among individual investors.
Notable Domestic Web3 Projects in 2024
- SNPIT: A GameFi app that rewards users with tokens for taking and sharing photos. Its blend of social networking and blockchain technology has attracted creators and collectors.
- CoinMusume: A blockchain game personifying cryptocurrencies as idol characters. Pre-launch marketing included collaborations with IGG, Yay!, and JPYC.
- Briliantcrypto: A gem-mining GameFi project that conducted an IEO on Coincheck, generating significant buzz.
- Yay!: A social app with over 9 million users that introduced staking features, allowing users to earn NFTs and utility tokens.
- FiNANCiE: A platform enabling influencers and businesses to issue personal tokens. Notable issuances in 2024 included tokens by entrepreneur Takafumi Horie.
Information Channels for Users
In 2024, X (formerly Twitter) remained the primary source for real-time crypto news and market trends in Japan. YouTube saw a decline in quality content, while Discord and Telegram grew as platforms for in-depth discussions. Professional media outlets like CoinPost, CoinDesk Japan, and Cointelegraph Japan were trusted sources for industry updates.
Prominent Crypto Influencers
- ADMEN: CMO of “boarding bridge” and “CRYPTO TIMES,” known for meme coin expertise.
- Noroi-chan: Founder of GAMIES, sharing insights on Web3 games.
- MA-LUCIAN: Co-founder of “OtakuLabs,” covering gaming and DeFi.
- taka\_\_crypto: Runs “AirdropList,” providing airdrop information for beginners.
- Bankera Dao: Shares curated crypto news and airdrop opportunities.
- Ratte: Founder of the Influencer Support Community (ISC), leveraging Web2 gaming experience in Web3 marketing.
Frequently Asked Questions
What is Japan’s current stance on Web3 regulation?
Japan has taken a proactive approach, with clear regulations for crypto assets, STOs, and stablecoins. The government is actively working on tax reforms and legal frameworks to support innovation.
How are Japanese companies adopting Web3?
Companies across sectors—finance, gaming, real estate, automotive, and more—are exploring Web3 for new business models. Sony, Toyota, and NTT Docomo are among the leaders in this space.
What are the tax implications for crypto investors in Japan?
Corporate investors benefited from the 2024 tax reform, which exempted them from mark-to-market taxation on unrealized gains. However, individuals still face high tax rates of up to 55%, though reforms are under discussion.
What role do local governments play in Web3 adoption?
Cities like Tokyo and Osaka are leveraging Web3 for regional development, using NFTs for tourism, digital wallets for events, and DAOs for community engagement.
How can individuals participate in Japan’s Web3 market?
Individuals can open accounts with domestic exchanges, participate in GameFi projects, or engage with influencer-led communities. For those looking to dive deeper, explore advanced investment strategies to maximize opportunities.
What is the outlook for Web3 in Japan for 2025?
With the Osaka World Expo serving as a catalyst, Japan is poised to showcase its Web3 advancements globally. Continued regulatory support and corporate innovation are expected to drive growth.
Conclusion: Challenges and Opportunities
Japan’s Web3 industry in 2024 showcased significant progress alongside persistent challenges. While regulatory improvements and new projects are encouraging, high barriers for individual investors and a lack of globally recognized projects remain issues.
The tax system, in particular, is seen as a bottleneck. Compared to countries like South Korea, where tax incentives stimulate retail participation, Japan’s stringent policies have hindered market vitality. Tax reform is crucial for enhancing global competitiveness.
Moreover, many businesses struggle to understand how to commercialize blockchain technology. Technical competitiveness also lags, with few Japanese Web3 projects making a global impact.
Despite these challenges, Japan’s potential is undeniable. With ongoing regulatory refinement, regional initiatives, and corporate experimentation, the 2025 Osaka World Expo offers a platform to demonstrate Japan’s Web3 capabilities to the world.