WebX, the Japan International Blockchain Summit, has opened, with Tokyo and Kyoto at the forefront of the crypto industry.

Original Title: "Tokyo vs Kyoto, Japan's Cryptographic Twin Cities"

Original Source: Beosin

Tokyo and Kyoto are two of the most representative cities in Japan.

Tokyo is the capital of Japan. It is the center of Japanese politics, economy, education, and culture, as well as an important hub for international exchange and innovation. Most of Japan's Web3 encryption organizations and active VCs are located in this bustling city.

Kyoto, with its long history and rich cultural heritage. Ancient charm, exquisite, and refined, the tranquil and simple Kyoto, despite its subtle and restrained aesthetics, has now become lively again because of encryption.

In an era where technological advancements are shaping the future of economies around the world, Japan is taking a strategic leap towards the Web3 revolution. Recognizing the transformative potential of blockchain technology, cryptocurrencies, and decentralized internet, Japan is working together to position cities like Tokyo and Kyoto at the forefront of this digital revolution. 

Tokyo vs Kyoto, a tale of two cities in the Japanese crypto industry

At the end of June this year, IVS Crypto 2023, Japan's largest international cryptocurrency summit, was held in Kyoto. Many well-known investment institutions set up booths at the venue to connect with Web3 startups from around the world. This made Kyoto, the ancient capital, become active again because of cryptocurrency.

IVS Crypto 2023 Conference

During the three-day conference, there were also several Japanese-style peripheral activities. Among them, the Web3 Shining Golden Pavilion sponsored by Beosin was held at the Kinkaku-ji Temple on June 28th, which successfully attracted many local Japanese teams to sign up. In the evening, Beosin held the "Web3 GEISHA ROOFTOP PARTY" high-end cocktail party in Kyoto city, which provided an important communication platform for international blockchain project parties and investors. We also saw the perfect integration of tradition and innovation in Kyoto on this night.

Beosin BD represents the on-site activities in Kyoto

After the successful IVS Crypto event in Kyoto, Tokyo will also host the first large-scale international blockchain summit of the second half of this year on July 25-26, called WebX Conference. This is a conference dedicated to bridging the gap between Web2 and Web3, Japanese and English, and Japan and other regions of the world. Top Web3 entrepreneurs, investors, and developers from around the world will gather to discuss how to introduce decentralized technologies such as blockchain into society.

It is worth mentioning that Beosin has reached a strategic cooperation with Cryptogram Venture (CGV), the organizer of the second Tokyo Web3 Summer Hackathon, to provide free Beosin VaaS smart contract formal verification platform authorization and 30 minutes of on-site and remote guidance for all projects participating in the Tokyo Web3 Summer Hackathon. This cooperation aims to provide security support for blockchain projects and developers worldwide to promote the development and application of blockchain technology.

Web3 encryption institutions "landed" in Tokyo and Kyoto

You can see that cities in Japan such as Tokyo and Kyoto are increasingly welcoming to Web3.

For example, Sony Network Communications, a subsidiary of Sony Group, recently partnered with Astar Network to launch a Web3 incubation program aimed at incubating projects that utilize NFTs and decentralized autonomous organizations (DAOs) for practical purposes. The program aims to explore how blockchain technology can solve various issues in the industry.

Similarly, automotive giant Toyota is also delving into the use cases of blockchain technology. In early April, the company held a comprehensive Web3 hackathon on Astar Network to help Toyota develop more efficient team management strategies and optimize its business decision-making processes. Regarding these developments, Sota Watanabe, founder of Astar Network, said: "Many Japanese companies, especially large companies such as Toyota and Sony, hope to work on Web3. I think the reason is simple. We completely missed the Web2 revolution, so Web3 is the next major opportunity for the Japanese economy."

In the Tokyo and Kyoto regions, we have also seen some growing Web3 encryption institutions. Here are some representative institutions:

Web3 Enterprises/Organizations in Tokyo

1. HashPort

HashPort Group was founded in 2018 with the vision of digitalizing assets and has accumulated a lot of achievements in blockchain technology. HashPort currently has three main businesses: HashPort, which provides blockchain technology consulting and solutions, HashPalette, which provides NFT-related technical support, and HashBank, which provides financial infrastructure services. In April 2023, HashPort completed a Series C financing of over $8.9 million.

2. KEKKAI

KEKKAI is a startup that focuses on enhancing the security of encrypted asset transactions. Although KEKKAI was officially established in early 2023, its wallet security plugin was officially launched in December 2022. In February 2023, KEKKAI completed a pre-seed round of financing of 50 million yen, with Skyland Ventures as the investor. The funds raised will be used for product feature improvement and security business expansion.

3. Skyland Ventures

Skyland Ventures is a relatively active local crypto fund in Japan. It has invested in KEKKAI and GoPlus in the blockchain security field, Orbiter Finance in the cross-chain field, Taiko in the Ethereum Layer2 infrastructure field, NFT data analysis platform NFTGO, and MEV resistance solution provider Wallchain. In April 2023, Skyland announced the completion of its fourth fund raising of 5 billion yen and established a seed fund focused on Web3 investment.

4. MZ Web3 Fund

MZ Web3 Fund was established by Yuu Maezawa, known as the "Musk of Japan", and focuses on investing in Web3 projects. It is the most active local crypto fund in Japan. MZ Web3 Fund has invested in 24 startups in the Web3 field, including decentralized storage project SINSO, payment tools Slash and Transak, development community WEB3DEV, game public chain Oasys, and Web3 user growth platform Aki Network. MZ Web3 Fund will provide community resources through MZ Club and MZ DAO to help these projects expand quickly in the Japanese market.

Web3 companies/organizations in Kyoto

1.QURAS

QURAS was founded in 2017 and has a branch in Kyoto, Japan. It is committed to providing blockchain solutions for enterprise clients to protect their privacy. Its application scenarios involve digital asset trading, supply chain management, healthcare, and financial services. In 2018, QURAS also launched the mobile wallet Quras Wallet and reached cooperation with multiple exchanges such as Uniswap, bithumb, and Mooniswap. In 2019, QURAS completed a Series A funding round of $16 million, with participation from Roark Fund, SEB Venture Capital, and other institutions.

2.SORAMITSU

SORAMITSU was founded in 2016, focusing on the research and development of blockchain technology, aiming to provide high-quality blockchain solutions for enterprises, governments, universities, and communities. SORAMITSU has many widely recognized projects in the cryptocurrency field, including Bakong, Hyperledger Iroha, etc. In 2016, SORAMITSU developed the Hyperledger Iroha project and contributed it to the Hyperledger project of the Linux Foundation, providing assistance for enterprises and financial institutions to manage digital assets.

3. NEO KYOTO NFT ARTs

NEO KYKTO NFT ARTs is a Web3 education project jointly planned by Huageer Holdings Co., Ltd. and SMBC Nikko Securities Inc. The project is to showcase and sell NFT art globally, featuring Kyoto students' creations of future Kyoto's space and content. Part of the sales revenue will be donated to Kyoto City for educational purposes. The project aims to establish a creative ecosystem that integrates NFT art with urban development.

4. Bar Krypto

Bar Krypto is a cryptocurrency bar in Kyoto that provides a place for digital nomads to passionately discuss Web3. Currently, Bar Krypto operates on a membership system, where customers can purchase their membership NFT on OpenSea to become a member. Members can name cocktails, participate in basement DIY renovations, and event planning.

The hacker ghost that cannot be bypassed in the Japanese encryption field

Japan used to be a pioneer in the field of cryptocurrency, but soon fell victim to hackers' attacks.

In 2014, the Japanese exchange Mt. Gox was attacked by hackers. Then, in early 2018, hackers launched another attack and stole over $500 million from the Japanese exchange Coincheck, severely hindering Japan's cryptocurrency development.

These two hacking incidents have greatly reminded regulatory agencies. After these hacking incidents occurred, Japan requested that customer assets and exchange assets be separated, and most of the exchange assets be stored in cold wallets.

Therefore, when FTX collapsed this year, Japan's regulatory approach demonstrated its advantages.

The Chief FinTech Officer of the Financial Services Agency, Ryosuke Ushida, who oversees the regulation of cryptocurrencies, stated that "FTX Japan's Japanese customer assets are likely to be returned without significant impact from the Chapter 11 bankruptcy filing in the United States." It can be seen that Japan's cryptocurrency asset regulation policy has played a significant role in protecting the assets of local Web3 users. 

Walking on the forefront of cryptocurrency asset regulation in Japan

In 2016, Japan revised the "Payment Services Act" and "Funds Settlement Act", and officially established them in 2017, clarifying the legal status of cryptocurrencies. On the one hand, cryptocurrencies are regarded as "cryptographic assets" in the "Payment Services Act". Operators engaged in the purchase, sale or intermediary of cryptographic assets, or managing cryptographic assets for the benefit of others, must register as cryptocurrency asset trading services.

On the other hand, the Financial Services Agency of Japan, a financial regulatory agency, regulates cryptocurrency exchanges through the Financial Instruments and Exchange Act (FIEA). Investment interests in blockchain transferable limited partnerships are considered securities (i.e. ordinary partnership securities transferred in a non-electronic manner). Under the FIEA regulations, businesses that provide or act as intermediaries for cryptocurrency-related derivative instruments are classified as Type 1 financial instrument businesses. Such businesses constitute investment advisory or investment management businesses and must be registered under the FIEA.

Regarding stablecoins, the Japanese government believes that their classification as either cryptocurrency or a payment method in remittances depends on whether they can be exchanged for fiat currency. In addition, since NFTs are currently not considered a means of payment, there are no regulations in place for them under the current regulatory framework. However, the Financial Services Agency of Japan has added the establishment of a regulatory framework for NFTs to its agenda.

Despite this, Japan is still constantly experimenting and adjusting in the regulation of cryptocurrency assets, and as the field of cryptography develops, related policies will also gradually evolve.

In April 2023, the Web 3.0 project team of Japan's ruling party released a white paper proposing measures to promote the development of Japan's cryptocurrency industry. In June 2023, Japan's revised Funds Settlement Act was passed by the Upper House, making it the world's first country to enact a stablecoin law.

The project team's secretary general, Akihisa Shiozaki, pointed out in a recent interview: "The cryptocurrency industry has always been driven by early adopters, but from now on it will shift to mass adoption." He pointed out that large Japanese companies have already begun to enter the market, and mobile operator NTT Docomo recently promised to invest up to 600 billion yen ($4 billion) in Web3 infrastructure. Moreover, large financial institutions are also seeking to issue stablecoins to achieve the digitization of the national economy.

Written in the end 

What can be seen is that Japan's embrace of cryptocurrency and Web3 is clearly a strategic move aimed at injecting new vitality into the economy. If Japan wants to leverage the emergence of Web3 to promote new economic growth, it must overcome many obstacles. Whether in crypto-friendly cities like Tokyo or Kyoto, there needs to be some truly groundbreaking Web3 companies that can demonstrate the potential of blockchain technology and serve as examples to inspire other Japanese entrepreneurs. On the other hand, we can also see that the country's Web3 policies, corporate partnerships, and regulatory progress are slowly paving the way for local Web3 development.

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