The Early Days of Blockchain In Japan
I entered the blockchain and cryptocurrency space in 2013, after having consulted on financial products for personal clients through my previous career in the financial planning business. The most well-known cryptocurrency exchange at the time happened to be Mt. Gox which was based in Japan. Due to the infancy of the industry and lack of proper regulatory measures during those days, Mt. Gox had many issues including a big hack. It was a big national issue especially as it brought mainstream media awareness to the unregulated nature of cryptocurrencies. I became acutely aware that interest in cryptocurrencies and Bitcoin was increasing day by day and that there was something worth thinking about more in depth as established stakeholders would become more aware of this industry moving forward and practical building would continue to ensue.
Around that time, I happened to meet Charles Hoskinson, the former co-founder of Ethereum, and we deeply connected over our shared belief in the potential of cryptocurrencies and blockchain technology to provide useful utility for a vast number of industries and people. There was a growing blockchain community of interested developers and investors in Japan at the time, to be one of the first real efforts in the country to build a blockchain and raise more mainstream awareness of blockchain in Japan and the surrounding region.
The Blockchain Industry in Japan These Days
When it comes to the relevant laws and regulations surrounding blockchain & cryptocurrencies, Japan was at the forefront in the region. With a base of interested blockchain enthusiasts from the early days, Japan had been one of the first countries to define cryptocurrency as an official method of payment and regulate crypto exchanges with KYC measures in 2016. However, since a hacking incident of Japan’s leading cryptocurrency exchange Coincheck in 2018, Japan has seen a shift to a more strict and conservative policy. While this is important from the standpoint of consumer protection, there is also a perception that the restrictions on leverage and taxing capital gains from cryptocurrencies as additional miscellaneous income may actually hinder the development of the blockchain industry.
Singapore on the other hand, is very strict with its anti-money laundering rules, but outside of that has been creating blockchain-friendly legislation that promotes the development of the cryptocurrency and blockchain industries. Japan can learn much from this example on how to foster our industry by promoting development and protecting consumers at the same time with appropriate policy initiatives that are well-balanced.
How Japan is Leading The Way
EMURGO is working on several ambitious projects, including a 5G alliance with NTT Docomo – Japan’s largest telecommunications company – a collaboration with large fintech company Metaps Plus to allow Cardano ADA payments at 30,000 retail stores in Korea, creating a blockchain task force with the Republic of Uzbekistan to develop a blockchain-based digital economy, and running a successful blockchain education business in India including collaborative partnerships with five well-known Indian universities.
Although our business within Japan is relatively small compared to our overseas presence, EMURGO is the best known blockchain firm with a Japanese heritage and proud to be a founding entity of Cardano which is a globally recognized top ten blockchain protocol. EMURGO & Cardano are always building the protocol and expanding the drive to adopt blockchain solutions abroad but also keeping in mind on how to tailor the built-up experiences to the Japanese market. Being a part of the Chamber of Digital Commerce’s Executive Committee has also been very fruitful in allowing us to share information resources with some of the top policymakers and stakeholders in the global blockchain industry.
One Of The Most Impactful Inventions Since The Internet
The cryptocurrency and blockchain industries are still in their infancy and many things have happened in the past five years, with gradual mainstream recognition. However, there is no doubt that this technology will be one of the most impactful inventions since the Internet, and it is being actively employed in both the developed and developing world. It is unfortunate that Japan, which had been at the forefront of this industry for a time, has now moved in a more conservative direction since the hacking incident for the time being. Of course, the customer protection standpoint is very important, so we hope to create many business use cases to demonstrate the useful utilities of blockchain technology, and then follow-up with further support to continue to contribute to the development of the Japanese cryptocurrency and blockchain industries. This shall provide encouragement for the Japanese government to shift back to a more progressive rather than defensive stance when it comes to driving the adoption of blockchain technology.
Ken Kodama is CEO of EMURGO – a global blockchain technology company providing solutions to developers, startups, governments, and enterprises. EMURGO builds enterprise-grade applications, builds developer tools, invests in startups, and provides blockchain education. EMURGO has offices and manages projects in Singapore, Japan, the USA, India, and Indonesia, and is a founding member of the Cardano protocol.