Japan’s radical transformation of its digital economy has received a jolt following the comments of the country’s Prime Minister Fumio Kishida. In a speech, the head of the Japanese government disclosed the new strategy as one that will rely primarily on non-fungible tokens (NFTs) and the metaverse.
The Prime Minister’s speech was given before the Japanese National Diet, made up of a bicameral parliament, where he indicated that steps have already been taken to bring the government’s goal to reality.
Kishida noted that in the coming months, national identity cards will be digitized using distributed ledger technology (DLT), while local governments across the country will be given oversight functions to find new use cases for the technology in their jurisdictions. He confirmed that his government will support private enterprise in the digital assets industry and “promote efforts to expand the use of Web 3.0 services that utilize the metaverse and NFTs.”
As proof of the government’s commitment to exploring Web 3 technology, it turned to NFTs to reward seven mayors with a proven track record of improving the digital economies of their cities. The NFTs were issued on the Ethereum network, leveraging the Proof of Attendance Protocol (POAP), with Prime Minister Kishida attending the award ceremony.
The Digital Society Promotion unit of the ruling Liberal Democratic Party unveiled a white paper that described NFTs as a pinnacle of the government’s plan to stimulate the digital economy early in the year. Given the revelation of the country’s strategy, financial institutions like SBI Group and Mitsubishi UFJ Financial Group have launched subsidiaries to explore NFTs.
Regulators are holding their ground
Despite the optimistic stance of the ruling party toward DLT and Web 3, Japanese regulators are not flexing their muscles over the ecosystem. The country’s tax regime is among the firmest globally, with corporate holdings of digital assets being subjected to a 30% flat tax on gains while individual investors face a maximum rate of 55%.
Back in 2018, Binance was kicked out of Japan for operating without the Financial Services Agency’s (FSA) consent in line with an earlier injunction for all industry service providers to be registered with local regulatory agencies.
Given the renewed push by Kishida, Binance is set to return to the country after four years, but it faces an uphill task of snagging market share from FTX and Crypto.com—exchanges that are already running operations in Japan.
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