- Japan’s slow crypto approval impacts domestic industry innovation.
- Industry leaders criticize regulatory process delays.
- Projects and liquidity shifting overseas to find growth.
Japan’s lengthy crypto approval process, regulated by the Financial Services Agency and JVCEA, is prompting startups and crypto funds to seek opportunities abroad, according to industry experts.
This regulatory sluggishness deters domestic crypto adoption, causing significant innovation and liquidity shifts to more agile markets like Hong Kong and Singapore.
Japan’s stringent crypto approval processes, overseen by the FSA and JVCEA, reportedly hinder the growth of domestic crypto projects. Industry leaders emphasize that slow regulations are leading to an exodus of innovation from the country.
Maksym Sakharov, CEO of WeFi, and Maarten Henskens of Startale Group, among others, have publicly noted the cumbersome dual-step approval as the primary barrier to thriving domestic crypto activity.
Japan’s approach to crypto regulation affects domestic markets, causing startups to seek friendlier regulatory environments abroad. “Japan’s slow and cautious regulatory process is the main reason Web3 startups and crypto funds are moving overseas—not the high taxes,” said Maksym Sakharov, CEO of WeFi. “Japan requires a two-step approval from the JVCEA and FSA, which can take 6 to 12 months or longer.
The financial impact includes discouraged institutional involvement and rigid regulation on crypto-assets, as noted by the FSA’s directive asking banks to minimize crypto-acquisitions.
Japanese projects are reportedly shifting to regions with more favorable regulations such as UAE and Singapore. This move could potentially undermine Japan’s position as a leading crypto innovator.
Based on historical tightening trends post-Mt. Gox and Coincheck, the approval process could continue to remain lengthy, limiting domestic growth. Experts believe that regulatory improvements are necessary to revitalize the market.
