<\/p>\n
Japan\u2019s regulatory bottlenecks, not taxes, are the real reason crypto innovation is leaving the country, according to Maksym Sakharov, co-founder and CEO of decentralized onchain bank WeFi.<\/p>\n
Sakharov told Cointelegraph that even if the proposed 20% flat tax<\/a> on crypto gains is implemented, Japan\u2019s \u201cslow, prescriptive, and risk\u2011averse\u201d approval culture will continue to push startups and liquidity offshore.<\/p>\n \u201cThe 55% progressive tax is painful and very visible, but it\u2019s not the core blocker anymore,\u201d he said. \u201cThe FSA\/JVCEA pre\u2011approval model and the absence of a truly dynamic sandbox are what keep builders and liquidity offshore.\u201d<\/p>\n Listing a token or launching an initial exchange offering (IEO)<\/a> in Japan involves a two-step regulatory process. First, a self-regulatory review by the Japan Virtual and Crypto Assets Exchange Association (JVCEA) is needed, followed by final oversight by the Financial Services Agency (FSA).<\/p>\n That process can stretch go-to-market timelines to 6\u201312 months or more, Sakharov said, adding that it \u201cburns runway and forces many Japanese teams to list first overseas.\u201d<\/p>\n He noted that there have been repeated delays in areas such as JVCEA token screening,\u00a0IEO white paper vetting and product change notifications to the FSA, which often require several rounds of revision. \u201cThe process is designed to avoid downside, not to accelerate innovation,\u201d he noted.<\/p>\n Related: <\/strong><\/em>Asia\u2019s OSL Group raises $300M for stablecoin and global expansion<\/strong><\/em><\/a><\/p>\n Compared to other jurisdictions, Sakharov said Japan lags significantly. \u201cJapan is slower,\u201d he said, noting that a simple token listing can take half a year or longer.<\/p>\n \u201cSingapore is strict too, but it provides clearer pathways\u2026 The UAE is faster on average\u2026 South Korea\u2019s VAUPA focuses on ongoing exchange obligations rather than a Japan-style external pre-approval, so listings are typically processed materially faster.\u201d<\/p>\n He warned that the proposed 20% tax and reclassification of crypto as a financial product won\u2019t shift the status quo unless the culture around approvals changes. \u201cCulture eats tax cuts for breakfast,\u201d Sakharov said.<\/p>\n As a solution, Sakharov urged regulators to adopt \u201ctime\u2011boxed, risk\u2011based approvals,\u201d implement a functional sandbox that supports staking and governance experimentation, and introduce proportional disclosure requirements.<\/p>\n He warned that without these changes, domestic crypto projects will likely continue to scale abroad, driven by uncertainty around approvals and long wait times, rather than tax burdens. \u201cIt\u2019s about building for 12 months only to be told your token can\u2019t be listed or your product can\u2019t launch.\u201d<\/p>\n Related: <\/strong><\/em>Asia\u2019s wealthy shifting from US dollar to crypto, gold, China<\/strong><\/em><\/a><\/p>\n Earlier this month, Maarten Henskens, head of protocol growth at Startale Group, said Asia\u2019s leadership in tokenization is drawing growing attention from global investors<\/a>, with regulatory clarity in the region attracting capital that was once on the sidelines.<\/p>\n Hong Kong has moved swiftly,\u00a0launching the Ensemble Sandbox<\/a> as a fast-track regulatory innovation hub. \u201cWhile Japan is building long-term depth, Hong Kong is showing how agility can bring experimentation to life,\u201d Henskens said.<\/p>\n <\/p>\n The United Arab Emirates has been another Asian country making strides in tokenization<\/a>. The city\u2019s regulatory authorities have introduced progressive frameworks that encourage the issuance and trading of tokenized securities, attracting global investors and fintech firms.<\/p>\nJapan trails UAE, South Korea and Singapore<\/h2>\n
Asia\u2019s lead in crypto draws global attention<\/h2>\n