Crypto startups in Japan are increasingly facing hurdles from an outdated and slow approval system, leading to their departure from the country.
Reasons for the Exodus
Crypto startups are steadily shifting away from Japan, and the root cause is not taxation. Maksym Sakharov, co-founder and CEO of decentralized onchain bank WeFi, states that the core problem is Japan’s outdated and sluggish approval system. The 55% progressive tax may be painful, but it is no longer the main reason for the innovation exodus.
Comparison with Other Countries
In Japan, listing a token and initiating an Initial Exchange Offering (IEO) involves two steps, which may take six months to a year or more. While Japan debates introducing a 20% flat tax on crypto gains, Sakharov argues that tax reform alone will not address the underlying issue. In contrast, countries like the United Arab Emirates and Singapore offer more appealing frameworks for crypto startups thanks to quicker and more transparent approval processes.
Need for Reforms
Sakharov calls for Japan to adopt time-limited claims-based approval windows and suggests a regulatory sandbox for experimentation with staking and governance. Without changes in the project approval system, Japan risks losing more startups abroad.
The challenges posed by Japan's outdated approval system significantly affect crypto innovation, necessitating reforms to retain startups in the country.
