According to Maksym Sakharov, co-founder and CEO of WeFi, Japan is facing significant regulatory challenges that negatively impact innovation in the crypto space.
Regulatory Issues in Japan
Sakharov noted that even if a proposed 20% tax on crypto gains is implemented, the slow and risk-averse approval culture will continue to push startups and liquidity offshore. "The 55% progressive tax is painful, but it is no longer the core blocker," he added. Long pre-approval processes by the Japan Virtual and Crypto Assets Exchange Association (JVCEA) and the absence of a truly dynamic sandbox remain the main barriers for builders and investments.
Comparison with Other Countries
Sakharov also highlighted that Japan lags significantly compared to other jurisdictions. It requires that the first part of the token approval or initial exchange offering (IEO) process goes through a two-step regulatory procedure. In contrast, countries like Singapore and the UAE offer faster paths to market, while processes in Japan can take 6 to 12 months or even longer.
Proposals for Improvement
The expert suggests that regulators adopt 'time-boxed, risk-based approvals' and create a functional sandbox to support staking and governance experimentation. He warned that without these changes, domestic crypto projects will likely continue to scale abroad, driven by uncertainty and long wait times.
Thus, it is the bureaucratic barriers, not the tax policy, that are the primary reason for the leakage of crypto innovation from Japan, requiring immediate action from regulators.
