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How the US Crypto Offensive Could Benefit Japan’s Regulatory Approach

2 mins
Updated by Kyle Baird
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In Brief

  • Japan could benefit from U.S. crypto crackdown, increasing its presence in the crypto space.
  • Japan's solid legal framework could advance the country as a hub for the crypto sector.
  • Revised Payment Services Act enables registered stablecoins for payments, ahead of other countries.
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Asian countries appear to be emerging as the biggest beneficiaries of America’s massive crypto crackdown. Japan is no longer the leader of the crypto hub race, but it could also be a big winner in the war on the industry across the pond.

On June 26, the Japan Times reported that the crypto turmoil in the U.S. “could be a boon for Japan.”

Japan Crypto Ambitions Accelerated

Local industry players believe the crackdown could be an opportunity for Japan to grow its presence in the crypto space.

The aggressive action in America could help advance Asia and Japan as a hub for the sector since it has already established a solid legal framework.

On June 27, Coinbase CEO Brian Armstrong reacted to the article stating that the U.S. is squandering an early lead. This was in part “because SBF embarrassed some politicians and regulators who now want to look tough on crypto,” he added.

“The way to solve it is just get sensible regs in place so consumers are protected and these issues will stop happening.”

Tokyo-based crypto exchange Bitbank boss Noriyuki Hirosue commented:

“The U.S. regulators are increasingly tightening controls, but that doesn’t mean the same things will happen in Japan,”

Learn more about the tools that the SEC is using to crack down on crypto:

What Is the Howey Test and How Does It Impact Crypto?

Japan is a pioneer when it comes to crypto, being among the first nations to establish legislation and regulations for the asset class. It had two hard lessons to learn from with major incidents and losses from the Mt. Gox and Coincheck crypto exchanges.

Additionally, Japanese regulations are strict, requiring crypto exchanges to register with the government and submit annual reports. They also empower financial regulators to conduct on-site inspections and issue business improvement orders.

Furthermore, a revised Payment Services Act came into effect this month, enabling the use of registered stablecoins for payments. Noritaka Okabe, chief of Tokyo-based stablecoin startup JPYC, said:

“In terms of regulations for stablecoins, Japan is clearly ahead of other countries. We’ve been getting quite a lot of inquiries (from overseas),”

Conversely, the United States, which has slumped in financial freedom rankings, has no regulatory framework for crypto exchanges. Instead, it has lumped them in with banks, securities, and stock exchanges.

Easing Crypto Tax Rules

Japan’s National Tax Agency published a partial revision of its corporate tax guidelines earlier this month. They include a new set of regulations for digital token issuers, scrapping previous high taxes on unrealized gains from crypto assets issued by companies.

“This represents a step forward in improving the business environment [in Japan],” reported local media on the development.

Top crypto platforms in the US | March 2024

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Martin Young
Martin Young is a seasoned cryptocurrency journalist and editor with over 7 years of experience covering the latest news and trends in the digital asset space. He is passionate about making complex blockchain, fintech, and macroeconomics concepts understandable for mainstream audiences.   Martin has been featured in top finance, technology, and crypto publications including BeInCrypto, CoinTelegraph, NewsBTC, FX Empire, and Asia Times. His articles provide an in-depth analysis of...
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