The Unstoppable Force of Japan’s Bureaucracy: How ‘Slow’ Approval Culture Stifles Crypto Adoption

Japan, a nation renowned for its innovative spirit and entrepreneurial drive, has been at the forefront of the digital revolution. Yet, despite being one of the world’s largest economies, Japan’s cryptocurrency market remains sluggish, with many businesses opting to set up shop elsewhere. So, what’s holding Japan back? According to WeFi CEO Maksym Sakharov, it’s not taxes that are driving Web3 startups and liquidity offshore, but rather Japan’s infamous “slow” approval culture.

In this article, we’ll delve into the intricacies of Japan’s approval process and explore the far-reaching implications it has on the crypto industry. We’ll also examine the consequences of this culture of delay and its impact on the country’s economic growth.

The Slowing Wheels of Bureaucracy

Bureaucracy is often seen as a necessary evil, a complex web of processes designed to ensure fairness and transparency. However, in Japan, this bureaucracy has become a major obstacle to innovation. Regulatory bodies, often backed by a plethora of laws and bylaws, create an environment that is hostile to startups and entrepreneurs.

Take, for example, the cryptocurrency exchange registration process. In the United States, the process typically takes a few months. In Singapore, it’s even faster – just a few weeks. In Japan, however, it can take up to 18 months or even longer for an exchange to receive approval. This prolonged delay means that businesses are forced to wait, wasting valuable time and resources that could be better spent on growth and development.

A Stifling Environment

The approval process is not the only area where Japan’s bureaucracy stifles innovation. Other regulations, such as those governing payment services and e-commerce, are equally restrictive. The highly complex nature of these laws means that businesses must invest significant time and resources in compliance, rather than focusing on growth.

For Web3 startups, these barriers to entry are particularly daunting. Companies like WeFi, which offers decentralized finance solutions, require a fast and agile regulatory environment to operate successfully. When faced with Japan’s slow approval culture, it’s no wonder that many Web3 startups opt to set up shop in more entrepreneur-friendly countries.

Tax Isn’t the Issue

Taxes, often cited as a major obstacle to blockchain adoption, are not the primary concern in Japan. While high tax rates may discourage some businesses from operating in the country, they are not the sole reason for the exodus of Web3 startups.

In fact, Japan’s tax environment is relatively favorable compared to other countries. The government has implemented a range of measures to encourage businesses, including a reduction in corporate tax rates and the introduction of a flat tax rate for new businesses.

Economic Consequences

The impact of Japan’s slow approval culture on the economy cannot be overstated. By driving businesses offshore, the country is losing out on valuable investment, talent, and innovation. The consequences are far-reaching, with a potential knock-on effect on GDP growth and employment rates.

Moreover, the stifling of innovation in the crypto industry means that Japan is missing out on the potential benefits of blockchain technology. From supply chain management to secure voting systems, the applications of blockchain are vast and varied. By not embracing this technology, Japan is potentially compromising its position as a leader in the global economy.

A Way Forward

So, how can Japan overcome its culture of delay and stimulate crypto adoption? The solution lies in simplifying regulations and streamlining the approval process. This can be achieved through the following measures:

Regulatory sandboxes: Create regulatory sandboxes that allow businesses to test new products and services in a controlled environment, without the need for lengthy approvals.
A single, unified regulatory body: Consolidate regulatory powers into a single, unified body, reducing the complexity and confusion of multiple agencies.
Increased use of data analytics: Leverage data analytics to streamline regulatory decision-making, reducing the burden on businesses and increasing the speed of approval.
Incentivizing innovation: Offer financial incentives and tax breaks to businesses that invest in blockchain technology, encouraging innovation and growth.

By taking these steps, Japan can stimulate innovation, attract investment, and cement its position as a leader in the global economy. The time to act is now – for the sake of Japan’s economy and its people, the country must embrace a more agile and entrepreneur-friendly regulatory environment.