Is the Japan Web3 market really opening up?

1. How is the Japanese Web3 market doing?

Since the Japanese government's Web3 deregulation policy in 2023, the Japanese Web3 market has attracted significant interest from global projects. Previously, Japan had taken a conservative stance on the Web3 industry following the Mount Gox hacking incident in 2014. However, in 2023, the government identified Web3 as a key national issue with the slogan "JAPAN IS BACK, AGAIN" and began implementing policies to revitalize the market.

Expectations for the growth of Japan's Web3 market are driven by two main factors. First, Japan's excellent content IP and technology can synergize effectively with Web3 innovations. Second, the market is just beginning to blossom, presenting numerous new opportunities for growth and development.

However, there are several challenges to the growth of the Japanese Web3 market. These include a lack of market liquidity due to high taxes on individual investors, a localized business environment focused on the domestic market, and a shortage of IT talent. However, in recent years, the global capabilities of Japanese Web3 founders have been strengthened and companies have been actively investing in the industry with tangible results. It will be interesting to see if the combined efforts of the government and the private sector can help Japan become a leading country in the global Web3 market.

In this report, we examine the key trends and news in Japan's rapidly evolving Web3 market during Q1, analyzing the market's growth potential and challenges.

2. Key changes in Japan from Q1 2024

2.1. Political changes: House of Representatives by-elections lost

The Japanese government's deregulation of Web3 was spearheaded by the Liberal Democratic Party (LDP)'s Kishida cabinet. However, as discussed in "Stance of Asian Political Parties on the Crypto Market," the Kishida cabinet's declining approval ratings have raised the possibility of a replacement, leading to ongoing anxiety that the current policy stance may not continue.

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