According to Maksym Sakharov, co-founder and CEO of WeFi, a Web3 company, Japan’s current method of overseeing cryptocurrency is hindering creativity and pushing business ventures overseas. Sakharov contends that the country’s “slow, rigid, and cautious” approval procedures are the main reason why crypto is not being adopted more widely, rather than any proposed changes to taxation. The current regulatory system, which involves an initial assessment by the Japan Virtual and Crypto Assets Exchange Association (JVCEA), followed by a review by the Financial Services Agency (FSA), can prolong the time it takes for projects to enter the market by six to twelve months, or even longer [1]. Sakharov believes this bureaucratic inertia is forcing new businesses and liquidity providers to prioritize international listings, which is diminishing Japan’s competitive position in the global crypto market [1].
Sakharov pointed to specific areas of inefficiency, such as repeated delays in the screening of tokens, approvals for Initial Exchange Offering (IEO) white papers, and notifications of product changes. He emphasized that these processes prioritize minimizing risk over fostering innovation, creating a system where “the emphasis is on preventing downsides rather than accelerating progress” [1]. He cautioned that the suggested flat 20% tax on crypto profits, along with reclassifying digital assets as financial products, would not resolve these underlying issues unless there are also fundamental changes in regulatory practices [1].
Comparing Japan to other countries highlights its shortcomings. While Singapore and the United Arab Emirates provide clearer regulatory guidelines and speedier approvals, South Korea’s VAUPA framework concentrates on continuous exchange obligations rather than pre-approval obstacles, enabling quicker listings [1]. In contrast to Japan’s careful, process-intensive strategy, Hong Kong’s Ensemble Sandbox demonstrates agility in promoting innovation [1]. Sakharov emphasized that Japan’s regulatory mindset, which values stability above speed, runs the risk of isolating the nation from global crypto developments and investment flows [1].
To overcome these obstacles, Sakharov advised using “time-limited, risk-based approvals,” developing functional regulatory sandboxes to evaluate staking and governance models, and implementing proportionate disclosure requirements. He claimed that these actions would bring Japan’s strategy into line with its global competitors while also lowering obstacles for innovators [1]. Domestic initiatives are likely to continue expanding abroad due to uncertainty and delays, rather than tax issues, if these reforms are not implemented [1].
This criticism reflects broader global trends in cryptocurrency regulation, where jurisdictions with flexible frameworks, such as the EU’s MiCA initiative, have boosted adoption by balancing oversight with experimentation [1]. However, Japan’s reliance on manual, time-consuming approvals stands in sharp contrast to these models, raising concerns about its capacity to retain talent and capital in the rapidly changing digital asset market [1].
Source: [1] Japan’s ‘slow’ approval culture stifles crypto adoption: Expert [2] Yield Optimizer ETH Price Chart (YOETH), Japan’s ‘slow’ approval culture stifles crypto adoption: Expert