Japan’s crypto industry is encountering prolonged delays in token launches due to regulatory complexities, according to Maksym Sakharov, CEO of WeFi. The regulatory process, which requires self-assessment by the Japan Virtual & Crypto Assets Exchange Association (JVCEA) followed by Financial Services Agency (FSA) approval, stretches timelines to 6-12 months for initial exchange offerings (IEOs) or token launches. This bottleneck has prompted many projects to seek more accommodating jurisdictions like the UAE and Singapore, where regulatory frameworks enable faster approvals and greater flexibility [1].
The FSA’s tightened compliance requirements, including pre-launch audits for utility tokens and enhanced anti-money laundering (AML) and know-your-customer (KYC) protocols, have intensified the challenge. Developers report delays of up to 90 days for regulatory clearance in 2024, compared to 30 days in 2023. Compliance costs for startups have surged by 30% in the past year, according to WeFi’s CEO, who argues that the current system prioritizes stability over innovation [1].
Industry experts highlight the need for a risk-based, expedited approval model and the introduction of regulatory sandboxes to foster innovation in areas such as staking. Such measures could align Japan’s approach with global peers while maintaining safeguards against fraud and volatility. However, critics caution that overhauling regulations too rapidly might undermine Japan’s reputation for financial integrity, a key factor in its crypto boom since 2020 [1].
The sector’s struggle reflects a broader global debate on balancing innovation with oversight. Japan’s share of global token launches dropped to 12% in 2024 from 18% in 2023, signaling a shift in momentum. Smaller firms and independent developers, less equipped to handle complex compliance demands, face heightened risks of being outpaced by well-resourced competitors. This dynamic could accelerate industry consolidation, leaving only larger entities active in the token space [1].
Stakeholders advocate for a phased compliance approach, allowing conditional approvals based on risk assessments rather than blanket restrictions. The FSA has acknowledged the need for stakeholder dialogue but has not yet outlined reforms. A spokesperson emphasized the agency’s commitment to “market stability and responsible innovation,” without specifying timelines for policy adjustments [1].
The outcome of these regulatory challenges will likely define Japan’s future in the global crypto landscape. Prolonged delays could further erode its competitive edge, while a balanced approach might reinforce its role as a leader in responsible blockchain innovation. For now, the industry remains in a state of cautious anticipation, weighing the potential for regulatory evolution against the realities of a rapidly changing market.
Source: [1] [Title: Japan’s Crypto Industry Faces Delays in Token Launches Amid Regulatory Hurdles, Says WeFi CEO] [https://en.coinotag.com/breakingnews/japans-crypto-industry-faces-delays-in-token-launches-amid-regulatory-hurdles-says-wefi-ceo/] [2] [Title: This Week in Fintech (Page 2)] [https://www.thisweekinfintech.com/page/2/]
AloJapan.com