As with all innovation, blockchain technology can only develop so far before it faces legal hurdles making it necessary to create an acceptable legal framework to grow within.
So far, even the leading blockchain countries have been slow to accommodate this fast-growing business and technology development, thus hindering and even blocking it from achieving its potential.
In terms of blockchain regulation, Japan seems to be dragging its heels relative to other nations even though it has been hailed as the gold standard for blockchain adoption. One of the panelists from AIKON’s The New Normal of Blockchain & Cryptocurrency talks organized in late October is Sota Watanabe, the CEO of Stake Technologies, and someone who was able to bring us up to speed with the developments in his country.
According to Mr. Watanabe, Silicon Valley is the most advanced region in the world when it comes to the development of blockchain technology and its integration with the existing systems, which is supported by its ability to attract a large number of investors.
In comparison, blockchain in Japan is late by two-three weeks in terms of development, which also seems to reflect on the number of companies that make real products.
This information is at odds with the general opinion surrounding blockchain development in Japan. For instance, in July 2020 CoinGeek reported rapid blockchain industry growth – by over 30% since 2019 – in the first half of the year despite the global economic slowdown as a consequence of the global pandemic.
The report stated that there were 430 companies present on the Japan blockchain market in May this year, 64% of which focused primarily on blockchain technology, while the rest was present on the market in a secondary capacity. Furthermore, almost half of the companies were labeled as corporations, thus signaling that blockchain is not limited to startups in Japan.
However, the effects of COVID-19 on Japan’s economy are apparent – they have yet to release J-Coin! This was the supposed digital coin that Mizuho and 60 other Japanese banks aimed to launch this year to replace cash.
Mr. Watanabe was of the opinion that Japan should move towards enabling blockchain technology to develop as part of a national strategy. In this sense, China is a shining example of setting up a favorable pace in which legislations are being pushed and enforced.
According to his own experience with the blockchain legal framework, the Chinese government is moving forward strongly into the blockchain space and is quickly approaching adopting cryptocurrencies into its financial system.
They are already shaping their overall policies to include cryptocurrency transactions in the long run, and even utilize bitcoin by the country’s defense system. By all accounts, it seems that China is able to recognize the low-cost system of trading bitcoin, which is where Mr. Watanabe believes the greatest potential lies for Japan as well.
He also indicated that there are still security concerns surrounding Bitcoin and blockchain adoption in Japan – where entities interested in using it still have a negative view of cryptocurrencies in general and are harboring fears that they are easily hackable and dangerous to use.
In that sense, Mr. Watanabe was quick to point out that bitcoin hadn’t been hacked in 11 years (since its inception), even though it has been in use 24/7 since then and despite numerous attempts. He hails this as a tremendous feat and proof that bitcoin is safe which also contributes to its ability to hold value.
In addition, Mr. Watanabe reflected on his desire to create a public blockchain and his own token from scratch. However, blockchain regulation in Japan is still being outlined to be able to provide the necessary support. Countries in general have difficulties recognizing the immense potential blockchain can bring and reflect it in their legal and taxation policies, but among the locations that seem to be advancing in that sense, Singapore stands out.
This has led Mr. Watanabe to move his operations there, but still stay focussed on championing the necessary changes for contributing to blockchain development in Japan.
“I would like to change it from the outside,” Mr. Watanabe stated.
In the end, the potential of blockchain technology in Japan, and in general, is very much on his mind in terms of the value of the Internet and the consensus of time and he plans on broadening his future work along those lines.
It leaves us hopeful that blockchain will find a clear path to integration into a wide range of systems across the world with highly competent and visionary people leading the charge.