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Is Japan in the Crypto Future? Or a Few Years in the Past?

Take a dive into the Japanese online realm, and you'll notice its somewhat antiquated appearance.

Japan offers a wide range of online activities that surpass what is available in the West, although there are a few significant exceptions. However, when it comes to the overall Web2 landscape, the country seems to be a decade behind. It's reminiscent of the internet's appearance during the release of the iPhone 4.

“The government really felt that we totally missed Web2...So now they see Web3 as something Japan could potentially embrace and create the new generation of Japanese tech companies and tech visionaries in this space," said Akio Tanaka, a founding partner of IVC, which recently hosted its IVS Crypto and Web Conference in Kyoto.

“There are no Web2 giants from Japan,” he continued.

Japan's regulatory achievements in the early stages of Web3 have received significant attention. In contrast to the United States, which has displayed hostility towards the industry, Japan appears to be embracing it and has taken steps to regulate it. These regulations were established as a result of the catastrophic Mt. Gox collapse in 2013. Ultimately, Japan emerged as the most secure environment for FTX customers.

But what does the celebration of Web3 look like in Japan?

Much like it did during the peak of the bull market in the Western world.

NFTs and GameFi are gaining significant traction, and interestingly, enterprise blockchain is also experiencing a surge. Several major Japanese companies are now declaring their Web3 strategies, accompanied by substantial investments. However, these strategies still remain somewhat ambiguous (such as "carbon credit trading" or "healthcare records") and are primarily in the conceptual stage.

Tanaka stresses that in Japan, the situation will be distinctively unique.

Japanese GameFi developers, for instance, “want to serve gamers, not crypto speculators,” he said.

“They will probably not try to create the same kind of speculative move that you may have seen outside of Japan, because they realize that can actually backfire and negatively impact their core game fans,” he continued.

Sega knows this well, as when it first mentioned it was entering the NFT space. It was hit with a strong backlash from fans, and recalibrated its stance, saying that if its venture into Web3 were “perceived as simple money-making…it would make a decision not to proceed.”

Similarly to Square Enix, although the financial market responded positively to its choice to adopt NFTs, beginning with beloved characters from Final Fantasy 7, widely regarded as the pinnacle of its longstanding franchise, the fanbase vehemently opposed the concept.

Ultimately, Square Enix's NFTs didn't serve as speculative assets since the on-chain assets are "frozen" to the purchasing wallet, preventing any further transfer or trading.

One cannot disregard the possibility that the enthusiasm surrounding Web 3 may be somewhat overstated, revealing a more cautious stance beneath the surface layers.

Despite the extensive discussions surrounding GameFi and NFTs during the event, Japan's most renowned intellectual property (IP) remains conspicuously distant from the trend, with the exception of Square's experiment. Nintendo had expressed interest in recruiting an expert in NFTs and the metaverse in March, but no tangible progress has been made thus far. Tanaka mentions that if Nintendo were to engage in such endeavors, they would likely be the last to do so.

The opening speech delivered by the Japanese Prime Minister at the conference refrained from explicitly mentioning Web3 by name. Instead, it comprised generic statements praising the significance of startups in fostering economic growth, along with the government's commitment to creating a favorable market for these emerging enterprises in Japan.

However, there is an underlying essence, albeit different from what the evangelists claim it to be.

As the interview with Tanaka neared its conclusion, the subsequent group, a corporate delegation from Sega, arrived ahead of schedule.

Sega, an investor in IVC, has recently made headlines by refuting rumors of its intention to be acquired. Although a spokesperson for IVC opted not to disclose the nature of the meeting, it is likely that cryptocurrency was a topic of discussion.