Japan and Singapore lead Asia’s crypto race as South Korea lags

• While Japan’s restrictive crypto regulations have started to ease, South Korea is contemplating stricter oversight.
• Crypto-related companies have been drawn to Japan’s more welcoming regulatory environment.

South Korean analysts and experts have taken note of Japan’s ambitious endeavors in the crypto and Web3 space, with some speculating that it might become a “crypto and Web3 El Dorado.”

While Japan’s restrictive crypto regulations have started to ease, South Korea is contemplating stricter oversight. This has raised concerns among its crypto firms.

Prime Minister Fumio Kishida’s administration in Japan has been proactive in fostering the Web3 sector, aiming to transform the country into a crypto and Web3 powerhouse.

The government has been implementing supportive measures and relaxing regulations, setting the stage for potential growth in these emerging fields.

Japan and South Korea vis-à-vis crypto in 2023

One notable move by Kishida was his video speech at the WebX conference in July, hosted by CoinPost, Japan’s largest crypto-focused media outlet. The event saw the attendance of high-profile government officials.

Industry leaders like Binance’s [BNB] Changpeng Zhao, and crypto pioneer Roger Ver were also present discussing the future of Web3.

Japan’s Web3 initiatives trace back to a 2021 cabinet meeting, where ministers agreed to provide intensive support to Web3 firms. This commitment has led to various measures, including fast-tracking tax reforms and stablecoin issuance laws.

In June, Japanese banks and trust operators gained legal permission to issue and distribute stablecoins.

In contrast, South Korean firms are still awaiting approval to enter the stablecoin market. As a result, overseas crypto-related companies have been drawn to Japan’s more welcoming regulatory environment. These include Binance and South Korean gaming giant Netmarble,

Binance entered the Japanese market in August 2023 through an M&A deal with a domestic startup.

Experts suggest that South Korea should focus on fostering its domestic market, easing regulations, and accelerating legislative efforts to maintain its competitiveness in the Web3 sector.

South Korea’s strength in cultural content, including K-pop and Korean dramas, could provide an edge if the government takes swift action to support the sector.

While Japan’s proactive stance is gaining momentum, the competition between the two Asian nations in the crypto and Web3 space is poised to intensify in the coming months.

Background: Japan’s Web3 policy development

Prime Minister Fumio Kishida’s commitment to Web3 dates back to May 2022 when he first unveiled his intentions during a meeting with investors in London. Subsequently, he made pledges to promote Web3, with a “basic policies” framework expected in November 2022.

The ruling Liberal Democratic Party (LDP) established Web3 and NFT taskforces, which initiated efforts for tax reform in December of the same year. These steps laid the foundation for Japan’s proactive approach to the Web3 sector.

Japanese firms like Mizuno and Casio have also announced their entry into the Web3 and NFT spaces. This further highlights the country’s growing interest in these technologies.