While Japan’s crypto tax system often gets blamed for stalling innovation, insiders say the real issue lies elsewhere.
Maksym Sakharov, CEO of onchain banking platform WeFi, argues that the country’s deeply conservative regulatory environment—not its tax code—is driving developers and liquidity abroad.
Even if Japan’s proposed 20% flat tax on crypto gains is passed, it won’t fix the core problem. Sakharov points to Japan’s drawn-out approval culture, calling it slow-moving, highly prescriptive, and risk-averse. The process of listing a token or launching an exchange offering can drag on for up to a year, thanks to multiple approval layers involving both the Financial Services Agency (FSA) and the Japan Virtual and Crypto Assets Exchange Association (JVCEA). For many teams, that’s simply too long to wait—so they launch elsewhere.
More than the headline-grabbing 55% progressive tax rate, it’s the bureaucratic hoops that stall projects at critical stages. Sakharov says delays in white paper reviews, token screening, and even minor product changes often mean several rounds of revisions. It’s a system built for caution, not competition.
Asia Moves Forward as Japan Falls Behind
Other countries in the region are taking a more agile approach. South Korea prioritizes ongoing oversight rather than pre-approvals, allowing for faster listings. The UAE has emerged as a global leader in digital asset regulation, and Singapore—though strict—offers clearer rules and quicker turnarounds.
Sakharov believes Japan needs to adopt faster, more flexible regulatory frameworks if it wants to keep up. He proposes deadline-bound approvals, better sandbox environments for experimentation, and simplified disclosure rules that won’t choke small projects.
Without those changes, Japan may continue to lose its most promising builders—not because of taxes, but because of a system that doesn’t move at the speed of crypto.
Source
Alexander Stefanov
Reporter at Coindoo
Alex is an experienced financial journalist and cryptocurrency enthusiast. With over 8 years of experience covering the crypto, blockchain, and fintech industries, he is well-versed in the complex and ever-evolving world of digital assets. His insightful and thought-provoking articles provide readers with a clear picture of the latest developments and trends in the market. His approach allows him to break down complex ideas into accessible and in-depth content. Follow his publications to stay up to date with the most important trends and topics.
Source: https://coindoo.com/crypto-innovation-is-leaving-japan-and-its-not-because-of-taxes/