Japan's governing Liberal Democratic Party's Web3 project team released a white paper outlining recommendations for expanding the nation's Web3 industry, which has become a key part of national strategy under Prime Minister Fumio Kishida's leadership.
As other countries focus on consumer protection regulations, Japan aims to create a more crypto-friendly environment, following firms' departure to other jurisdictions due to high tax burdens.
The Web3 project team has been working around typical bureaucratic procedures to develop regulatory proposals covering non-fungible tokens (NFTs) to decentralized autonomous organizations (DAOs).
"The cryptocurrency industry has been driven by early adopters, but it will shift to mass adoption from now on," said Akihisa Shiozaki, secretary-general of the party's Web3 project team, in an interview with CoinDesk Japan.
Shiozaki noted major Japanese players are entering the market, with mobile phone operator NTT Docomo committing up to 600 billion yen ($4 billion) to Web3 infrastructure and large financial institutions considering stablecoin issuance.
The white paper emphasizes Japan's leadership role at the upcoming G7 summit, where crypto will be a topic of discussion.
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It proposes that Japan focuses on Web3's future potential and clarifies its leading position on technology-neutral and responsible innovation.
The paper also recommends additional tax regulation changes, including tax exclusions for companies holding tokens issued by other companies not intended for short-term trading.
The white paper highlights the urgent need for accounting standards as Web3 firms struggle to find auditors.
It suggests that ministries and agencies support the Japanese Institute of Certified Public Accountants in developing guidelines.
The paper also advises the establishment of a DAO law based on Japan's godo kaisha business structure, and modifications to the Companies Act and Financial Instruments and Exchange Act regulations.
Furthermore, the white paper proposes public-private partnerships to create guidelines for legal business models for fantasy sports services and suggests cooperation between public and private sectors to address data and NFT rights.
The document recommends the appointment of a Web3 minister to oversee policy promotion and international cooperation.
It also suggests issuing crypto visas for skilled workers and expanding the startup visa system.
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