CGV Research: Innovation In Businesses And International Cooperation Would Boost Japan’s Web3 Landscape
In Brief
CGV Research has published a new report analyzing Japan’s Web3 landscape and suggesting potential solutions for improvement.
Research team from CGV FoF, an Asia-based crypto-focused fund of funds, has published a new report titled “‘The Lost Three Decades’ as a Lesson: Japan’s Web3 Industry Must Guard Against Similar Pitfalls” providing an analysis of Japan’s Web3 ecosystem and suggesting potential solutions.
“In my opinion, Japan’s current development in the Web3 space is akin to the Japanese proverb ‘Making a Buddha statue but not putting in the soul,’ which means: ‘They made a Buddha statue, but didn’t breathe life into it,'” said Steve, Founding Partner of CGV, in a written statement. “Although the Japanese government has done a lot of work in drafting Web3 policies and setting standards, there are clear shortcomings in actual implementation and critical steps,” he added.
The study provides insights into Japan’s Web3 landscape, emphasizing that while Japan has embraced Web3 technologies and introduced supportive policies, its conservative culture and intricate bureaucratic processes have slowed the pace of innovation.
This cautious approach stems from Japan’s societal preference for stability and risk aversion, where both corporations and government bodies tend to choose safer, well-established paths over experimenting with emerging technologies. As a result, despite being quick to adopt new technologies on the global stage, the process of commercializing them tends to be slow and fragmented.
Current State Of Web3 Development In Japan
In 2023, the Japanese government released the “Japan Web3 White Paper,” outlining development plans for blockchain and digital assets. This initiative aims to foster an environment that encourages the growth of Web3 technologies through policy support. Furthermore, in 2024, a law was passed allowing venture capital and investment funds to hold cryptocurrency assets, signaling Japan’s strategic intent to use Web3 innovations as part of its broader digital economic transformation efforts.
Furthermore, several major Japanese companies are actively exploring opportunities in the Web3 space. Sony has created a dedicated department to focus on blockchain and NFTs, while its Singapore-based subsidiary, Sony Block Solution Labs, recently introduced a Layer 2 scaling solution for Ethereum, Soneium. Meanwhile, SBI Holdings has invested in blockchain payments, digital asset management, and more. Now, it collaborates with Ripple to improve cross-border payment systems using blockchain technology. Additionally, NTT Group is concentrating on blockchain infrastructure. In 2024, NTT announced partnerships with Web3 projects to explore the use of blockchain in smart cities and Internet of Things (IoT) solutions.
Despite the Japanese government’s proactive initiatives to support Web3 development, a complex regulatory and compliance framework poses considerable challenges for many businesses. The Financial Instruments and Exchange Act (FIEA) and the Payment Services Act impose rigorous requirements on cryptocurrency assets, including strict anti-money laundering (AML) and Know Your Customer (KYC) obligations. This regulatory complexity results in high costs and prolonged delays for companies seeking licenses and approvals.
Furthermore, Japan is experiencing a notable talent shortage in emerging sectors like Web3, especially in comparison to other countries.
CGV Research Suggests Enhancing Policy Execution, Bolstering Innovation And International Cooperation To Address Challenges
CGV Research notes that the Japanese government must implement specific measures to address the issue of delayed policy execution. First, simplifying approval processes can help minimize unnecessary bureaucratic obstacles. Additionally, enhancing interdepartmental cooperation is essential. The government could establish cross-departmental working groups dedicated to advancing Web3 policy implementation, ensuring better collaboration among agencies, and reducing delays.
Moreover, Japan might benefit from adopting a “sandbox” regulatory model, similar to those in Singapore and Hong Kong, allowing companies to test new business models and technologies under temporary, relaxed regulatory conditions.
In order to inspire companies to take bold steps in the Web3 sector, the Japanese government should introduce various incentive measures. For instance, tax incentives could encourage businesses to invest more in research and development, such as offering tax deductions for research expenses related to blockchain technology to lower innovation costs. Additionally, creating a dedicated innovation fund could provide financial support to small and medium-sized Web3 enterprises.
According to analysts, international cooperation is essential for Japan to achieve advancements in the Web3 sector. Therefore, Japan should actively pursue partnerships with other countries and enterprises. For instance, forming strategic alliances with firms in regions recognized for their blockchain expertise, such as the US and China, to acquire industry insights and experience. Furthermore, enhancing collaborations with foreign universities and research institutions could help cultivate high-end talent and address the existing talent gap in Japan’s Web3 sector.
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About The Author
Alisa, a dedicated journalist at the MPost, specializes in cryptocurrency, zero-knowledge proofs, investments, and the expansive realm of Web3. With a keen eye for emerging trends and technologies, she delivers comprehensive coverage to inform and engage readers in the ever-evolving landscape of digital finance.
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Alisa, a dedicated journalist at the MPost, specializes in cryptocurrency, zero-knowledge proofs, investments, and the expansive realm of Web3. With a keen eye for emerging trends and technologies, she delivers comprehensive coverage to inform and engage readers in the ever-evolving landscape of digital finance.
