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Web3 in Japan: A Complete Overview (2024)

Web3 in Japan: A Complete Overview (2024)

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Written by Bryan Lam

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Reviewed by Brady Werkheiser

Published on 2024-05-295 min read

web3 in japan

We live in an era where technology plays a major role in the economy of countries all over the world. Currently, web3 is a hot topic of discussion in the business world and Japan is positioning itself as the spearhead of this transformative movement. 

To do so, the Japanese government is embracing facilitating policies and new legislation around web3 technology. The country’s companies jumped on the digital movement and are actively developing projects around web3.

As the cradle of pop culture, Japan is equipped with not only massive gaming corporations but also numerous Anime & Manga IPs that are recognized worldwide. To name a few, Sony and Bandai NAMCO have been both actively investing in the web3 industry through incubation programs. 

But it is not only the entertainment industry that is affected by the web3 movement, every Japanese business is jumping on web3 projects. To name a few, telecommunications companies such as NTT Docomo and KDDI, and automotive companies such as Toyota, Mazda, and Honda are also trying to find new opportunities in web3.

In parallel, Non-Fungible Tokens (NFTs) have also been popularized in the country and are assets of the digital revolution. For example, famous Japanese designer Takashi Murakami has collaborated on a collection of NFTs that are being sold on OpenSea.io. Furthermore, the tokens have been used to improve the user experience of many visitors and consumers in Japan.

Finally, the cryptocurrency market has interested Japanese investors; with JPY ranking third in BTC trading volume on Coinhills. JPY holds the third highest market share following USD at the first place and KRW at the second. Japan founded its own blockchain: Astar, which has relationships with national corporations such as Sony and Toyota, amongst others.

That being said, adopting a new technology is not always easy. With web3 getting more attention every day, many major corporations are encountering diverse challenges by advancing their web3 development. 

To solve their issues, Hakuhodo KEY3 has been founded as a company specializing in the adoption of web3 technologies in major companies. KEY3 provides full-channel support for web3 business ranging from web3 project management, creative planning and development, and web3 hackathon organization.

To learn more about KEY3, read our recent article: "Meet Key3: Japan's Leading Web3 Education DAO"

How the Japanese Government is Approaching Web3

The Japanese government is making an effort to make web3 projects more attractive with legislation around web3. During the WebX 2023, Asia’s largest Web3 conference, Prime Minister Fumio Kishida of Japan reaffirmed his commitment to embracing web3 technology and harnessing its vast economic potential.

Kishida pictures web3 as a driving force capable of bringing a new era of capitalism in Japan, defined by innovation, startups, and digital progress, with a priority to user safety and the opportunity to boost the content industry. 

Emphasizing the government’s dedication to advancing web3 development, Koichi Hagiuda, the policy research council chairman of the ruling Liberal Democratic Party, is encouraging an inclusive approach. Indeed, he points out that everyone, even those unfamiliar with web3, should actively shape Japan’s future in this fast-growing domain.

Government-Led Reports and Hackathons

To drive more web3-focused businesses, the Liberal Democrat Party’s web3 project team (web3PT) published a whitepaper in April 2023 on vital proposals, such as modifications on tax regulation and accounting standardization.

Web3PT is also still actively organizing hackathons on web3 legislation.

Through hackathons, they also conduct discussions about the development and rulemaking of the web3 technology. In these hackathons, stakeholders are exploring solutions to short, medium and long-term issues. For example, what are the conditions that companies have to fulfill to be classified as a Decentralized Autonomous Organization (DAO).

Regulatory Changes to Japanese Venture Capital

Before the recent regulatory change of February 2024, Japanese venture capital firms were prevented from investing in crypto assets. Consequently, web3 startups in Japan frequently sought support from overseas investors. 

However, now that the Ministry of Economy, Trade and Industry (METI) has approved the amendment that allows limited partnerships in Japan to invest in web3 medium-sized companies and startups, the region is expecting a rise in the emergence of crypto and blockchain startups originating in Japan. With this regulation, it is now easier for these companies to acquire investors and funds.

In conclusion, Japan aims to become a powerhouse in web3 technology. By advocating for a fast adoption of new technology and driving innovation, the country positions itself as a global leader in the web3 economy, solidifying its status as a digital juggernaut. 

Japan’s Prime Minister's encouragement and accommodating laws for web3 is set to launch Japan’s digital transformation, reshaping its economic landscape. Backed by the government and influential corporations, the country is destined for exponential growth in the web3 sector.

Web3 in Japanese Companies

Massive Japanese companies have started investing in web3 projects. Let’s preview how web3 is being utilized in the following three large market cap sectors: automotive, telecom and gaming. 

Japanese Automotive Industry

In the automotive industry, notable leaders such as Toyota and Nissan have made substantial investments in web3.

Toyota

In the automotive sector, one notable corporation, Toyota, has made echoes back in 2019 by funding the Toyota Blockchain lab which is verifying the usefulness of web3 technology through proof-of-work. Blockchain has allowed Toyota to keep better tracking of their drivers’ performances and improve the transparency with their fans during the Toyota GR Cup.

They have also held an event to collect NFTs for visitors of the Tokyo Auto Salon 2024. This event allowed customers to receive digital collectibles and once they gathered enough stamps, they may also receive physical gifts from the Toyota booth.

Nissan

Another example is Nissan who filed four web3 trademarks in March 2023, in the US, and is exploring the digital automotive industry in the web3 space.

The trademark states that it is undergoing development for “an online marketplace for buyers and sellers of non-fungible tokens (NFTs) and video, images, artwork, tickets, audio, sounds, music, and trading cards authenticated by non-fungible tokens”.

Japanese Telecom Industry

With telecom, major players NTT Docomo and KDDI have already started exploring crypto projects.

NTT Docomo

In parallel, reputable Japanese telecom companies have also started adopting web3 technology. In March 2024, the biggest telecom operator in Japan, NTT Docomo, launched through its subsidiary branch a web3 wallet that targets its consumer.  

The wallet currently allows the holder to manage NFTs as well as cryptos on four blockchains:

  • Ethereum

  • Avalanche

  • Polygon

  • Astar Network

KDDI

Similarly, KDDI, the second largest telecom, has also launched their own wallet which is described as easy to use and welcomes first-time users.

Japanese Gaming Industry

In the gaming sector, multinational corporate companies such as Sony and Bandai NAMCO have invested non-negligible amounts into web3 through incubation programs during these last years. 

Sony

Sony has partnered with Startale Labs (Astar Network) and invested $3.5 million USD in a web3 incubation program. The goal of this program is to create new entertainment experiences with web3 and Sony resources as well as using NFTs to support creators and artists.

Bandai Namco

Bandai Namco established the “Bandai Namco Entertainment 021 Fund” to invest in web3 and metaverse companies. It is estimated that they will spend around  $23.8 million USD over the span of 3 years.

Square Enix

Square Enix invested $2.01 million USD in “The Sandbox”, an Ethereum-based web3 game, and announced a partnership with the PC gaming platform “Elixir” which aims to make web3 games more accessible.

Anime

Moreover, anime IP owners have also started to release NFTs as a part of their web3 project.

Industry giants, such as Kodansha, Production I.G, and WIT Studio, have also dedicated resources to the web3 space. Specifically, Kodansha will focus on two major IPs, namely “Ghost in the Shell” and “Fairy Tail”. A series of NFTs were released related to these franchises.

To fans, the NFTs are becoming a standard and it is reasonable to expect more drops from famous IPs in the near future.

Hackathons in Japan

Lastly, the country has been vigorously conducting hackathons since last year. For lawmaking, there are hackathons purposely made for discussions about the development and rulemaking of web3 technology. 

Striving for digital innovation, Hakuhodo and Hakuhodo KEY3, its subsidiary branch for web3 projects, collaborated with partner companies to sponsor the “Web3 Global Hackathon” in 2023. 

The sponsors are global companies namely Toyota, Mazda, and Mitsubiushi, and the projects are tailored toward their audience with an implementation of web3 technology.

There were entries from a total of 377 engineers and creators from Japan and overseas, and 65 teams submitted prototypes. Currently, KEY3 is the co-organizer of the WaveHack event that is happening in Tokyo and will last until the end of August 2024.

For more information on WaveHack read our article: "Wavehack: Japan's Premier Web3 Hackathon"

With worldwide brands pursuing digital growth in the web3 ecosystem, we can only expect that more will follow nationwide. Japanese companies have already departed from the starting block of the digital revolution and are looking to be global leaders in web3 products.

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