Japanese crypto community got a shock today when Nobuchika Mori announced his retirement this summer. Mr. Mori is the central figure when it comes to Japanese crypto scene. One of the most forward-thinking regulators on the Japanese front, the regulations which govern the Japanese crypto market to large extent are his creation. He is also the longest-serving member of Japan’s Financial Services agency.
Japanese regulatory bodies are known all over the world for their conservative approach to finance. Given the preponderance of money laundering schemes and Yakuza, Japanese regulators tried to avoid the new financial techniques and emerging markets. This trend was understandable but also led to a huge negative impact on the technological health of the country.
The shelling effect always insulates one from the world but it also creates fewer opportunities for innovation. Innovation is sparked by the interaction. There is surely an element of caution but the close off was very unstrategic move by Japanese governments. Hence the Japanese imposed strict regulations and initiated a policy of not legitimizing new classes of assets.
Echoes from the past
The shelling is not new when one looks at how Japanese reacts to the new forces. The closing of Japan happened around 1600 which brought its heavy trade to a standoff. The political system degenerated into shogun warlordism and division. It became so weak that United States navy practically coerced them to open their ports for US trade in the nineteenth century. The shock was staggering.
After the defeat, they learned their lessons quickly and thus Meiji restoration of 1868 began. The aggressive adaptation of new technology and policies led to a revival of Japanese power. So much so that they achieved impossible by beating Russia in 1905. It was never imagined after enlightenment that a European power can be beaten by an Asian power.
Similar Tactics
Mr. Mori’s policies were similar to that of Meiji Japan. The aggressive courting of emerging markets, new technology, and asset classes put Japan again on the map. Mr. Mori focused on policies that have the positive impact on the creation of an ecosystem that supports startups and fintech companies.
He was aware of the problem and admitted that the over-regulation and negative approach is responsible for Japanese demise in the tech field. Chinese and South Koreans meanwhile were racing ahead on fintech, crypto, and other fronts. Mr. Mori thus directed Financial Services Agency (FSA) to shift their stance and embrace new startups.
According to Leo Lewis, FT correspondent of Tokyo, “Mr. Mori knew, intimately, that Japan’s financial sector had fallen behind in IT, fintech, blockchain and its general embrace of the digital. Faced with an exciting, emerging genre that had already captured the imagination of the Japanese public, it must have been tempting to overlay on to crypto a load of pre-existing national ambitions centered on tech start-ups, fintech and encouraging more retail cash to flow around the system”
As a result of these policies, Japan emerged as the top crypto exchange market all over the world. They are ahead of US, China and South Korea combined. The Japanese markets alone have almost two-thirds of the global Bitcoin trade, a number three times to that of United States.