Recently, I’ve been looking into Japan’s blockchain ecosystem and noticed some pretty interesting phenomena.

Speaking of which, Japan’s moves in the crypto space over the past few years are definitely worth paying close attention to. Ever since the country formally recognized Bitcoin as a legal payment method in 2017, it has been following a relatively balanced development path—neither one-size-fits-all, nor letting things run wild. The government has even rolled out a five-year startup support program, with a particular focus on web3 gaming, DeFi, and blockchain development. In fact, this kind of policy support is relatively uncommon globally.

Because of this kind of environment, Japanese crypto exchanges and related companies have been able to thrive. bitFlyer is a typical example—since it was founded in 2014, it has grown into one of Japan’s largest cryptocurrency exchanges, with a user base of 2.5 million. They don’t just operate in Japan; their business has expanded to the US and Europe. They’ve also developed their own blockchain technology, Miyabi, and rolled out innovative applications such as retail merchant payment solutions and on-chain voting.

What’s interesting, though, is that innovation in Japan isn’t limited to the trading layer. I’ve seen some companies working on deeper infrastructure development. For example, Soramitsu—since 2016, they’ve been collaborating with central banks and financial institutions in various countries to develop Cambodia’s Bakong digital payment system. They’re also building a cross-border payments platform now, improving the international remittance experience using stablecoins and CBDCs. This line of thinking is indeed ahead of many Japanese crypto exchanges.

There’s also a category of companies focused on DeFi innovation. For example, Nuts Finance (also known as Thetanuts Finance) is a decentralized options trading platform. Users can earn premiums by selling options, and they can also earn interest through the lending market. Their governance token, NUTS, allows holders to participate in decision-making. This DAO model is also quite representative in Japan’s blockchain ecosystem.

The gaming sector is even more eye-catching. The 《My Crypto Hero》 developed by Double jump.tokyo once became the world’s largest blockchain game. In August 2024, it also secured a $10 million Series D funding round led by SBI Investment. This shows that Japan’s web3 gaming accumulation has already gained recognition from international capital.

The infrastructure layer is also strong. Curvegrid-developed MultiBaas is a cross-chain development middleware that simplifies developers’ workflows across different blockchain platforms. They’ve also launched NFTeapot, a Shopify app specifically customized for NFT sales. These are all helping build a more complete toolchain for Japan’s blockchain ecosystem.

There’s also plenty to look at in payment innovation. PassPay’s JPYW is a yen-pegged stablecoin aimed at addressing financial pain points for Japanese residents abroad. Their wallet app supports multi-chain assets and NFT interactions, and they have already established partnerships with the EOS network. This kind of localized solution also demonstrates how well Japanese founders understand market demand.

From a macro perspective, the maturity of Japanese crypto exchanges and the overall ecosystem is indeed increasing. It’s expected that by the end of 2024, the number of daily traders will reach 500,000 people, reflecting a continued improvement in market penetration. What’s more, investor preferences are also changing—not just focusing on Bitcoin and Ethereum anymore, but starting to explore web3 products, NFTs, and other innovative applications.

In the end, Japan has made it to where it is today in the crypto space thanks to the government’s clear stance and companies’ ongoing innovation. This balanced regulatory environment gives entrepreneurs stable expectations, and it also creates more choices for investors. Recently, the government also announced that it will introduce a regulatory framework that allows startups to raise funds through crypto assets, further confirming Japan’s long-term optimism for this industry. The development trajectory of the entire ecosystem is definitely worth continued attention.