Cryptocurrency Adoption in Japan: Trends and Predictions | KBW2023

uh uh all right uh thanks everyone um let's make it quick because everyone probably wants to go to side events um okay um good afternoon uh my name is Lloyd I'm the founder and C of hyper Rhythm we're a crypto Prime broker based out of Japan and Korea um today we're a session we're uh this session is about cryptocurrency adoption in Japan um as introduced we have um tan Akio Tanaka from Headline Rio matar from Oasis um and tat Hashimoto from AAR uh let's start with a one minute intro um um Akio do you mind starting sure um so I'm a partner from Headline Asia but we also have a a token fund called IVC which some of you might have heard about uh we are probably one of the most active seed stage uh VC investing tokens uh with about 200 portfolios and actually Oasis uh mban is one of our portfolio companies here um so today I'm actually here to actually share with you what's happening in Japan there's a lot of exciting things we actually seeing seeing in Japan kind of opposite of what's happening in the US and SEC so hopefully we can share with you some interesting news from from Tokyo today all right thank you yes okay my name is Rio uh from Oasis the question who has been in IBS crypto in end of June oh okay thank you so uh we we uh we oous uh the gaming blockchain uh uh born in Japan and also we uh had a huge sign event and using the N Castle they announc a bunch of the know games uh in today I want to I want to share what's happening in Japan especially in a gaming space uh yeah uh I'm I'm really excited you know be here yeah all right thank you um do you mind uh yeah I'm from ason Network and I work for the as a business development especially in Japan and uh as networ is Leo and blockchain and uh also the gates for the uh Japan Market for the foreign company or project and uh yeah I used to work for the business development at crypto Exchange in Singapore but now I'm working the US Network and uh yeah work with the traditional big Japanese company like a Toyota Sony ntity this kind of stuff yeah we helping the you know the develop deploy the some of application in Japan yeah and we aim to the deploying the uh application uh as a web we have in the future so so we for our future feature is like interoperability and uh developer friendly and uh yeah next all right uh yeah I think to summarize um one of the largest VCS in Japan um headline the largest uh gaming L1 in Japan Oasis the largest general purpose and L1 um Asar in Japan um yeah and U yeah okay uh one of the largest prime Brokers uh in Japan Korea thank you um and yeah so today I have some questions uh that I prepared uh for each of you so um let's start with um Akio um can you do you mind um shedding some light on how um um headline has uh witnessed uh evolving dynamics of crypto industry in Japan um especially um IVs kto which was held in June was a huge success um I I I think everyone here um also attended yes yeah well thank you uh so let me actually talk a little bit about what's happening in Japan and put it some historical perspective so historically Japan's being known for probably world's biggest fuckups in crypto so yeah yes Mount Gau was the first and probably one of the largest crypto disasters in history and it happened in Japan and then few years later we had another uh crypto exchange hack which was also historic at the time so what does this mean well Japan actually yes went through the worst um crypto consumer facing crypto disasters but that actually gave us time to learn and uh and make some lessons so one of the things that happened in Japan was that as conservative as the country may look it was one of the first G7 Nations to actually create set of regulations on how to uh run crypto exchanges so one interesting tidbit is that when FTX entered Japan officially uh two years ago through acquisition of local exchange liquid they had to negotiate with the Japanese government and one of the things that Japanese government insisted before FDX was legally allowed to own Exchange in Japan is that uh they had to repatriate all of the offshore FTX accounts that belong to Japanese users to FTX Japan yes it was very unpopular at the time I think for Japanese FTX users but that happened so what happened was uh some people left FDX they ended up moving to binance because they didn't want to be part of FDX Japan but then some other PE others were uh basically brought into FTX Japan now fast forward two years when FTX blew up if you're a user of fx.com or FTX us well good luck you still haven't got your money back but people in Japan be uh were actually safe because FDX Japan have regulations to make sure that the exchange had segregated account if they should and uh it is also not mixed with other pools so they were actually able to rescue all those consumers so you know it's not really well written internationally but I think it's actually a big Triumph for the Japanese Regulators they actually created safe rules that didn't hurt consumers now fast forward to today there are now uh a couple of major uh initiatives that's happening in Japan so Japanese government for whatever it's worth made web three the national agenda so it's now government's economic strategy and so the ruling party ldp has now established web three task force within the government and then if you go down to FSA which regulates Japan's financial industry they even have a web three team within FSA but they're very different from what's happening in SEC sec I don't think is their agenda is to actively promote web three in US Financial system it's probably the opposite because they're suing left and right in center but in Japan the fa 18 team is actually there to try to figure out how to enable new industry so they talk to us investors they talk to our portfolios and couple of new things happen this year one which is also first among G7 Nations they legalized stable coins and it's actually not a stable coin there's a three different kinds of stable coins that's now legalized in Japan and creating rules and we think all those activities that's happen in Japan it's not really sexy because it's boring regulatory stuff but we believe that's going to actually enable us to actually innovate in the legal in the legal Arena to create new industry so that's what we're very excited about in Japan and I think gaming and Enterprise are definitely going to be the beneficiaries of the more Progressive crypto policies we're seeing in Japan today all right thank you um I think that's very comprehensive and uh couple things to note first FTX Japan was 100% solvent um if you search uh fgx Japan solvency or insolvent um I think and I think a lot of people know uh know uh heard about this news already um and two uh web 3 has become a national agenda for Japan so I think uh that's very um um insightful um Rio can you share some color on how the Japanese government is treating blockchain or web 3 games because that's I believe uh that's the focus of Oasis at the moment okay uh everybody thinks that it says that Japan have high potential because we have the huge IP but the we also have a problem of tax so uh the Japanese individual uh uh you know the uh revenue from the crypto trading will be regarded the income General income the Japanese General income maximum uh you know uh tax rate is a 55% so people doesn't trade so the liquidity is you know uh the really uh severe problem in Japanese you know crypto scene uh in the buom market it's fine people just buying a whole it's fine liquidity is enough but in this kind of bare Market people doesn't trade so uh Japan has you know enough GDP and buying power because we have the third largest GDP even though uh we have the large in know buying power uh the liquidity is very low compared to the you know the here uh the Korea uh the so we have you know kimuchi premium right so maybe uh maybe few years ago we have we had a sushi premium with the FTX uh you know some some some earn with using Su maybe we now have you know Wasabi discount right yeah so so the yeah without without liquidity that might be you know really really you know great potential uh because you know most of the gaming company in Japan is challenging to web three because uh the actually the web 2 Gaming industry is almost black oent so uh thinking about the web two you know industry only three titles which has you know the launch in this year has recouped initial and initial budget it's more than uh it's more than red ocean so uh the all most of them has to challenge into the web three yeah uh so it's very positive uh you know sign for web three World actually yeah uh that's my you know yeah um okay so I think um roio was trying to um emphasize the liquidity problem that Japan faces despite the uh economic uh scale that Japan has and at the same time web 2 games are very um not really profitable at the moment um so yeah there are uh opportunities and challenges at the same time that Japan's web 3 games are facing um another question uh sorry the next question goes to um t um so um I believe um AAR has many um daps and um applications uh what are the main focuses that you guys have at the moment um I believe um as a BD you're probably working on new collaboration new Partnerships probably you can't disclose everything today yeah some are still under discussion but I'm I'm just wondering as an as a uh Enterprise focused L1 what are your focus in terms of business development okay thank you uh at the beginning like uh you know in the aster Network we we have a lot of the project like in terms of the gaming and the entertainment stuff but at the same time uh as L mentioned before as is a layer General blockchain so of course we uh you know work with just normal traditional company like a congr company or you know automobile vehicle or you know whatever and uh yeah we help help them to you know deploy the application or you know blockchain related something yeah and uh now we want to you know more looking forward to the working with a you know big company including a Korean company like a you know LG and Samsung whatever and we can help them to deploy in the application like of course in Japan most of the big company like like don't have the specific idea for the blockchain or website like you know let's say the or she is focusing more gaming stuff and then Japan have really a lot of gaming company and then a lot of use case for that but in terms of let's see the other side other you know use case or something it's really hug and they don't have it's really hard to them to you know imagine what what can they what they can do for related to blockchain or something so now we try to be you know work with them and then think the you know blue blueprint of the blockchain with them or something like that yeah this is what us working in the looking for now yeah mhm um yeah we'll get back to a followup question afterwards um next question is just I just improvised this one um and it goes to um Akio um so I I noticed um the Prime Minister Kisha he did uh he sent a congrat congratulatory um video to IVs right um and I think it means huge because um honestly speaking like we cannot imagine like Koreans cannot imagine like President Yun um sending a video to KBW to congratulate the opening of Korea blockchain week hopefully we will be able to next year or or a couple years later yeah um but um I think uh prime minister sending a supporting message to crypto conferences it's not just that third that that couple minute video uh but I I I believe it has more significance of Japan putting more Focus as a government towards web 3 so uh maybe if you can give uh some background U it'll be more helpful yes so I actually did speak with uh a lot of the cabinet office and also other policymaking teams at Japanese government and one thing I can tell you is that uh prime minister is not promoting web 3 so that Japan can have the next crypto bubble that's definitely not the message so what is the message well it's kind of a Nuance but I think the government realized that the Japan unlike Korea actually and the the rest of Asia really didn't have this startup agenda as a main economic policy until quite recently so as a country I think the policy makers feel like we totally lost out in the previous cycle of startup booms and unicorns emerging out of that and um the whole um uh uh web 2 uh uh uh ecosystem so obviously it's too late for Japan to gain back the last 10 years so the government is now focusing okay what is this new where Japan could still potentially come in strongly and have leadership and they felt web 3 is such a topic so what are they actually looking at they're definitely not trying to turn Japanese consumers into you you know a nation of crypto speculators in alt coins that's not the agenda uh but there's actually a genuine belief I think that there are underlying infrastructure with blockchain that can be actually enabling the new Industries so part of that is finance L you guys involved in that so they actually want are looking for new kind of financial products and services being built on blockchain and the stable coin is just one part of that and they also realize entertainment whether it's IP or gaming is also Al potentially uh uh enabled by the new blockchain based Solutions and then it goes all the way to the industry which is why you know unlike I think you don't really hear about other L1 chains working with Sony likes of Sony Toyota and and those and NT those large Enterprises but that's not the case in Japan because they genuinely believe that the actually blockchain enabled Solutions can actually drive Japan's future GE technical Innovation so the whole fascination with web 3 in Japan is not about you know talking economics it's actually more to do with enabling industry enabling technology for the specific vertigal where Japan could potentially Excel all right um yeah thank you I think that's very comprehensive now I sound like a politician all right um next question um uh uh in line with the government's Focus I think we can talk about uh regulations um so Rio um P can you uh give some more background of how Japan is treating web 3 games in terms of regulations so um I think ois has a special structure um and has been trying to on board many Japanese companies to build their web 3 games on Oasis um I believe um those gaming companies had a lot of concerns around regulations so um can we can we talk more about this okay so first uh it's it's about tax and liquidity uh then second there's accounting problem the Japanese are gaming most of the lot Japanese gaming startup are already listed to you know at the Tokyo stock exchange with you know with low market cap the and sometimes 50 million or 100 million 50 50 million he's talking about not the big game companies you know but smaller like social game companies right it's Solly listed so but you know listed company is a listed company you know uh they need accounting audit so lots of you know uh talented entrepreneur are you know it's in it's in in a kind of jail of the being a public company they cannot do some CH the Big Challenge and also the lots of uh an audit firm like uh like big four or including I don't mention the exact name we you know who they are The Usual Suspects but they they they say h we won't audit you uh if you are issue token directly I mean the fible token yeah so that's a big problem they cannot they need to to make the really really complex lecture to make the audit firm yes the Auditors will refuse to audit if they don't want to do that no they will audit but they will not get clean audit which would be a problem as a listed company yeah then lots of the gaming listed Gam company will use really really complex structure so it takes a lot of time to is to the issue token and also it launch their games y thank you um and speaking of tax um I think Asar was one of the projects that actually raised this issue uh to the the Japanese government so um in Japan there's this uh problem called watana bota problem watana bota is the founder of Asar um and and because he had to move outside of Japan to pursue the business because of Taxation now this has circled back to the Japanese politicians and it's uh described Asam right um can we briefly um give more background about this and then um and I also know that uh a lot of members from Asar are um either um in Singapore or in Dubai in Netherlands um I'm just wondering how how is this taxation affecting AAR um in in expanding your business yeah what yeah Lord mentioned and yeah we our is moved to the Singapore because of Taxation problem and uh yeah it's so sad for us because we really love the you know Japanese culture and the food and the IPS kind of stuff yeah but uh we try to you know ly to the you know government the politician or something like that but they ask us to you know make a use gates in the outside of Japan so that's why we going to Singapore and then make some us Gates a lot in in the over the world and then now we export export to the you know Japan with the US case and then we try to be you know work with the Japanese company and the government local government yeah local government also really interest in the you know web stuff actually we have a the community for the Enterprise and the local government it's called as Japan lovees it's really have a lot of the big name the company yeah and that happened to some of the use case with the you know small startup and the big company or something like that yeah this kind of stuff we like that and then what's the question again what One S problem maybe let me Define for people outside of what that actually is so uh basically in Japan if you're the a crypto founder like as founder SOA let's just say you just did um you just launched your token suddenly on paper maybe your stake in the whole you know as's token is worth billions but of course as a Founder you're not going to sell you're just holding on to it but the current Japanese taxation law is that let's just say on paper if you had a billion dollar gain at the end of the year you are now liable for the tax for your gain even if you haven't sold a single token so that creates a problem because as a Founder if you try to pay tax by selling your token you're going to be basically driving down the price of your token in significant way and you wouldn't want to do that but if you don't suddenly you might be you know liable for like 500 million dollar tax in Japan which is crazy now what's interesting is that sort of problem is used in the government today not as a a something to criticize a web three industry they're actually using this people from the meti for example talk about this a lot lately okay so SOA problem is a problem for Japan because we have we are losing talented entrepreneurs to overseas jur jurisdictions like Singapore and Dubai so the government is talking about SAA problem so that we can change the tax code and in so that in the future Founders like SAA can actually stay in Japan and issue tokens without having this kind of crazy tax liability and good thing is they're working on it and looks like uh in the near future it's going to be resolved so you can actually do what sorted it previously outside of Japan and being able to do that in Japan right so basically if you issue tokens you were uh taxed on your unrealized returns um and that prevented Japanese Founders to stay in Japan but now they're moving outside Sor scary now now they're coming back because it's it will be solved what's scary it's only one way taxation meaning if you have a gain you get taxed but if you have a loss you don't get tax credit right right thank you so much cover me yeah yeah and now it's already fixed about this kind of program and now we still have the remaining the the other problem like a to the week is very hard to uh holding the token by issued by the start party it just happen same with you know what s pram so now including a s and maybe other of the web three entrepreneur try to you know fixing this kind of problem too and then if fixing this kind of problem and the Japanese entrepreneur is coming to Japan and and even the you know maybe foreign project too and then we can you know collaborate well and then maybe in the future Japan going to be the H over the web3 and uh yeah maybe leading the web3 the standard in Japan and uh yeah I really you know uh looking forward to working with you guys and collaborate together and uh you know you know step up more farther wly era and the standard MH thank you um so actually our session was uh had a subtitle which nobody cares but um it was Trends and predictions so we talked about Trends uh but we didn't talk about predictions so um this question goes to uh Ro um I'm wondering how you're thinking of the Japanese uh crypto or web 3 Market in general to uh roll out in 2024 so 2023 is already August it's already it's already September uh this year is almost done done so I'm just thinking what are your predictions for 24 um do you have any um exciting um road map or any expectations for the market okay uh I have confidence that the next successful model of the blockchain game will uh come up come up from Japan because almost all well Talent talented game developer is in uh the web 3 gaming gaming game development and also Japan has the third largest gaming market after China the us then also Japan has highest AP arpu aage late on payment user Japanese people pay a lot for games and it's the number one in the world so it's a good uh OB obviously it's a good great Market the best market for web 3 and by the way it's very relevant for Korea because Japanese players also love Korean games we have people playing games from you know net mobile here and also our friends are com to us so it's actually uh very what he's talking about also very relevant for our Korean friends let me one more things about Korea the Korea has second largest arpu in the world yeah yeah so and I Al I think it also works the other way around so there are many um Japanese games um I mean from from 80s 90s and even recently like there was um um mus yeah which was a huge hit and a and a topic of debate uh in Korea yeah so I think it works both ways oh sorry what was the debate um let's talk about it afterwards yeah yeah the trends okay ne ne next successful game will definitely comes from Japan mhm because you know every Japanese gaming Mobile gaming company is challenging the new thing uh it's it's it's still in the experiment of f but I I'm I'm confident that they will you know figure out the successful model then when the success model is found uh the huge IP IP Holder will put their real famous a world famous IP onto the success model that was same with the and web two ER yeah all right um okay so we're nearing the end of our session uh let's have a 30 second wrap up um feel free to um um advertise uh promote um IVs feel free to promote OAS Sr uh can you uh taia do you mind starting yeah I can I can go first and yeah as I mentioned before as is a gateway for the Japan Market incl including a Korean company and the Korean project and then we really are looking forward to working with you guys and yeah ASA is the number one blockchain public blockchain L1 blockchain in Japan and uh we work with you know Sony Toyota just kind to Big Enterprise and we know how to work with them so I'm really uh more than welcome to talk with you guys and also in the next week in the 2049 in the Singapore we have a really really big announcement related the you know huge impact to the global and the Japan so please uh don't miss it and uh yeah and please uh talk later and uh yeah thank you so much all right thank you um Rio do you do you want to go ahead okay I already announced lot of the game at the you know a Kos hands event so as we as we announced the G lots of games uh licensed by Sega and also the first Ubisoft blockchain game title and also sumoners World from come to us and also some game from DMM number one you know browser game platformer and also well talented you know al already listed Web Two gaming and private share well is it's about to launch their game from around this winter yeah but you know you guys know the you know uh the gaming industry winter is very long yeah uh but you know keep tuned about that all right thank you uh lastly um Akio do you mind wrapping up the entire session sure well actually this is something more personal uh recently our not token fund our main fund got a a a commitment from uh Korea's government kic uh into a new fund and uh thank you but one of the uh underlying things we working was we want to actually build stronger Bridges between careers Ventures and of course blockchain but Al also including you know things outside of blockchain between Korea and Japan and we are also the organizer of the largest Venture and web three event in Japan called IVs which is also a partner of KBW so next year we are working more closely with the uh organizers of KBW to bring two events closer together so so that it's going to be easier for people in Korea to go to both events back and forth and same for Japanese users and uh so our my my last message let's do something exciting together and I would love to see many of you in Kyoto in Japan where we will have the next IVs all right thank you um so lastly if you're looking to raise funds go to Akio if you're a game developer go to go um if you want to work with Japanese Enterprises uh meet tatsa if you don't know what to do come to me all right well said all right thank you um thank you for listening thank you so much thank [Music] you