In the early stages of the crypto industry, Asia, represented by Japan and the Hong Kong Special Administrative Region of China, was an important force in cryptocurrencies around the world.
From the earliest Bitcoin exchange Mt. Gox to Cardano, known as the Japanese Ethereum, they were all leaders in Japan's Web3 field. Together with a number of exchanges in Hong Kong, China during the same period, and South Korea's "Kimchi Premium" phenomenon, they constitute the earliest historical footnotes of the development of Web3 in Asia.
Asia’s contribution to Web3 goes beyond this. Stablecoins represented by TRC20-USDT have established the pricing standards and market size of the entire market. TRON originated in Asia and grew in Asia. Now TRON also hopes to enter a new stage of development in Asia, and the first choice is to use the Japanese market as a breakthrough.
As Justin Sun, founder of TRON and member of Huobi’s global advisory board, said, “The main driving force of Web3 comes from the integration of finance and blockchain technology, and stablecoins and RWA are two key areas.” It just so happens that TRON has extensive exploration in both directions, such as USDT and TUSD, and has launched its latest product stUSDT in the latter.
Japan is also one of the earliest countries to explore regulatory frameworks and new business models such as the Metaverse and NFT. Unlike Dubai, Singapore and Hong Kong, among the large developed economies in Asia, Japan is also a relatively friendly region to the Web3 field.
Japan hopes to surpass its competitors and become the next leader in the Web3 wave.
Japan is not afraid of bull or bear markets, and it has joined the game. The "Start Next Innovator" led by the Ministry of Economy, Trade and Industry has sent 1,000 entrepreneurs and students to Silicon Valley and other regions in the past five years. This year, the scope of selection will be expanded to France and Singapore to broaden students' horizons and cultivate more emerging industries, one of the most important of which is the Web3 field.
Looking at the world, Japan's Web3 layout has attracted enough attention. The WebX conference held at the end of this month opened, and important guests including Japanese Prime Minister Fumio Kishida, TRON founder and Huobi Global Advisory Board member Justin Sun, etc. gathered together to explore the Japanese moment in the Web3 field.
Japan + Web3: A new era of "industry and entrepreneurship"
Unlike the laissez-faire and ex-post regulatory policies of European and American countries, Japan has followed the government-led industrial model since the Meiji Restoration, and this feature has also been brought into the Web3 field.
Gather strength and integrate knowledge and action
In May 2022, Japanese Prime Minister Fumio Kishida stated that he would use blockchain technology, as well as Web3-related facilities such as NFT and Metaverse, to build a new Japanese society with more innovative vitality to achieve the so-called "asset income doubling plan" and realize a benign "new capitalism" based on "growth and distribution";
In June 2022, the Japanese Parliament recognized the legal status of stablecoins, defining them as a form of digital currency, setting a precedent for large economies to recognize the status of stablecoins;
In July 2022, the Ministry of Economy, Trade and Industry (METI) of Japan established the Web3 Policy Office in the Minister's Secretariat, which will be responsible for formulating a policy framework related to Web3 to encourage more entrepreneurs and start-ups to stay in Japan and improve the business environment for the development of Web3 in Japan;
In April 2023, Japan released the Web3 white paper, which included proposals in multiple areas including NFT and DAO. It will reform major issues including tax laws to mitigate the negative impact of token issuance and holding.
The most important thing is that at the "WebX" conference on July 25, 2023, Japanese Prime Minister Fumio Kishida delivered a video speech, saying that Web3 can change the existing landscape of the Internet and trigger widespread social changes, and Japan can use Web3 as a key move to solve existing social problems.
Not only the Prime Minister personally supports and is enthusiastic about it, but various departments of the Japanese government and all sectors of society have gradually realized the potential for underlying innovation of Web3, just as Web2 revolutionized Web1, mobile Internet surpassed the PC era, and smartphones replaced keypad phones, ultimately giving birth to world-class giants such as TikTok.
It can be said that this time, Japan hopes to bet on Web3 and take the lead in the evolution of the global Internet. Sun Yuchen, founder of TRON, one of the largest sponsors of this conference and a member of Huobi's global advisory board, also said: "Web3 at this stage is like countless times in history. Without a loose regulatory framework, the innovative vision of Web3 will not be truly realized."
Developing Web3, policy first
The Japanese government's policies have been closely following the development of Web3, from the earliest exchanges to various stages such as NFT and the metaverse, and were eventually incorporated into the unified concept and scope of Web3.
The Payment Services Act of 2017 stipulates that cryptocurrencies are mainly regulated by the FSA (Financial Services Authority), making it the first country and region in the world to distinguish between securities and cryptocurrencies. It establishes the principle of consumer protection, emphasizes the separation of exchanges' own funds and user funds, and strict anti-money laundering and other compliance measures.
We all know what happened later. After the collapse of FTX, exchanges such as Binance started the asset proof competition. EDX, which has a Wall Street background, emphasizes operating in a third-party custody model that does not hold user funds.
This is also the uniqueness of Japan in the development of Web3. Its regulatory system is currently the only overall framework that can better balance individuals, governments and enterprises. After the collapse of FTX, its subsidiaries and branches in many regions around the world have encountered related crises, but FTX Japan is an exception. Due to Japan’s strict regulatory environment, FTX Japan’s customers have not encountered serious bank runs.
This is a major shock to Japan's regulatory system. After proving the effectiveness of its regulation, Japan also wants to make up for the lost thirty years in the Web3 field and make up for the missed mobile Internet.
In March 2022, Japan's ruling Liberal Democratic Party released the "NFT White Paper (Policy Recommendations)", which is basically synchronized with the development of NFT. Unlike the bureaucratic and time-consuming process, this white paper only took about 3 months to come out, which is extremely fast in the red-tape Japanese officialdom.
A year later, the "Web3 White Paper - Towards an Era Where Everyone Can Use Digital Assets" was released, which involves tax reform, which is of most concern to investors and practitioners. One of the key points is that they hope to align with the international mainstream rather than work in isolation.
Not only in the Web3 field, AI is also another direction.
After ChatGPT shocked the world, the Japanese government quickly invited OpenAI co-founder Altman to visit Japan. This is very different from our previous conservative impression. It is a miracle that a country that only eliminated floppy disks in the 21st century could follow up so quickly.
It’s an attempt to catch up with the world again.
Entering the mainstream market: TRON’s strategy
The Web3 field is undergoing changes and innovations all the time, and new developments need to be followed up in a timely manner. Taking RWA as an example, it is expected to become the entry point for global institutions, governments and enterprises to enter Web3 in a big way, but there are not many companies that can provide corresponding services and solutions.
As mentioned above, the Japanese market is relatively friendly to stablecoins, but the overall situation of the global stablecoin market has changed. It is a little difficult to launch a stablecoin based on the Japanese yen. The stablecoin strategy based on RWA is more friendly to regulators, and the security of people's assets is also guaranteed.
TRON has been accumulating experience in the stablecoin and RWA products for some time. Currently, the locked-in volume of stUSDT, the RWA re-pledge product based on USDT, has reached 416 million US dollars. The current circulation volume of TRON USDT is more than 40 billion US dollars, and there is at least a hundred times of room for growth. Focusing on developing the Japanese market at this time is bound to increase new market share.
The era of innovation has arrived, and Japan has begun to re-energize. The government will take the lead in promoting a variety of "DX (digital transformation)" initiatives aimed at comprehensively promoting IT in Japan, one of which is to work on expanding the use of Web3 services.
The focus is to explore the applications of stablecoins and RWA to expand the adoption of Web3 in the whole society, create a Japanese version of the Web3 revolution, and make up for the lost time.
Stablecoins have a bright future
Currently, mainstream Japanese consumers' awareness and interest in the Web3 field are still limited, and government policies require more intensive user education to be converted into market share.
Listing on Japanese exchanges needs to comply with the "Rules for the Issuance of New Coins" and the supporting "Guidelines on the Rules for the Issuance of New Coins" issued by the Virtual Currency Exchange Association (JVCEA) under the Financial Services Agency of Japan. The specific process is very strict and complicated, even more so than traditional IPOs. It generally takes 3 months to 2 years for a token to be listed on an exchange.
Only about 5% of consumers in Japan have used blockchain-native products such as crypto wallets, and it is difficult for overseas companies to enter the Japanese-speaking market;
Traditional game giants such as Nintendo have limited enthusiasm for NFT, GameFi or the Metaverse, and are mainly trying to test Web3-related business models through traditional game operations.
As mentioned above, Japan has lifted the ban on stablecoins. At this conference, TRON also focused on introducing stablecoins. TRON has the largest circulation of the world's largest stablecoin USDT, accounting for 52% of the total global supply of USDT, reaching more than 44 billion US dollars.
As Justin Sun said, the advantage of CBDC over stablecoin is that it is issued by the central bank and its authority is guaranteed by the government, but there is also the problem of tracking user usage and possibly infringing on user privacy. Stablecoins have been in operation for many years and actually have a huge market of 150 billion US dollars.
In terms of specific plans, stablecoins can be fully integrated with CBDC. For example, a 1:1 anchored stablecoin supported by CBDC can be issued, which can be used in areas such as cross-border settlement. All it requires is a mobile phone and an on-chain address, without the need for a traditional complex bank remittance system.
For example, Tron is compatible with multiple stablecoins at the same time, such as the emerging True USD, whose market value has soared to US$3 billion this year.
The digital yen happens to be one of Japan's focus points. It is currently considering designing its specific issuance plan, and it is very likely to adopt a model based on the existing public chain and connect to the global blockchain network.
RWA is more suitable for the Japanese market
Justin Sun brought the RWA concept to Japan when it was still in its infancy. Although Japanese companies are generally conservative, some have joined the game. For example, Japanese telecommunications operator NTT docomo will invest up to 600 billion yen (about 4 billion U.S. dollars) in the Web3 field to support Web3 technology and entrepreneurship in Japan.
What Japan is currently best at is regulation, and its effectiveness has been recognized by the global market. The same is true for RWA. The tokenization of real assets also requires title confirmation and certification by government agencies and third-party organizations. In theory, the issuance of stablecoins is also a RWA model.
Furthermore, stUSDT supported by TRON is also a RWA product, which is based on Lido's re-staking model and shares the stablecoin revenue with all holders. In this regard, TRON is both a carrier for the issuance of stablecoins and a carrier for re-staking stUSDT. The dual validity will provide ideas for Japan's Web3 practice.
However, Japan is currently considering issuing the Ethereum version of the stablecoin. Whether Tron can be accepted or connected still needs market observation. It is still unknown to what extent Japan, which has always been conservative, will open up.
For example, True, another stablecoin issuer, has issued the offshore RMB stablecoin TCNH, and the Japanese yen stablecoin can also adopt a similar approach and be included in the full regulatory system. Assets including real estate, various commodities, and even artworks can be tokenized, and the liquidity from the tokenization of ownership can be unlocked, and more individual investors can be introduced to participate, bringing a new way of investment participation besides purchasing tokens.
To borrow a famous quote from the Greek philosopher Plato, “A city is made virtuous and good by being made a unity”, unity is the most beautiful quality of a city, and the globality of Web3 is exactly the quality that is scarce in today’s human beings.
From the East to the West, all are caught up in quarrels and divisions, but Japan, which used to keep itself out of trouble, is simply seizing this opportunity, hoping to create its own Internet landscape for the second half.
For Japan, Web3 may become a magic weapon to boost Japan's economic development, just like the Industrial Revolution to Britain and the Information Revolution to the United States.
In fact, Japan’s innovations in the Web3 field are not limited to this. Comprehensively benchmarking China’s Hong Kong talent policy is also one of the key points. For example, it plans to launch a digital nomad visa, referring to the digital nomad visa issuance model that is currently in operation in some European countries.
Secondly, the visa requirements for overseas entrepreneurs will be comprehensively relaxed, including not only traditional business operators and job seekers, but also organizations such as venture capital institutions. The start-up visa will be used to support foreigners who start a business in Japan within 1 year. Compared with the previous "business/management" visa, the review conditions have been greatly relaxed.
Furthermore, the conditions for foreign entrepreneurs to open Japanese bank accounts have been relaxed, and we hope to do our best to create more convenient residence conditions for users. For startups that had to leave before, a more friendly local environment will cultivate the most basic domestic market and have the opportunity to expand overseas markets.
For Tron, entering the Japanese market marks a new chapter in its Asia-Pacific strategic operations. The developed economy with a population of 100 million will change the existing Web3 industry landscape, and the power of Asian cryptocurrencies will be comparable to that of Europe and the United States.
However, it is still necessary to note that Japan's overall Web3 industry structure is relatively fragile. Whether Tron's ambitions can be truly realized will not be achieved overnight, and the issuance of RWA and stablecoins will also face competition from multiple parties.