Original Author: 0x min & James

Original source: Shenchao TechFlow

When you think of Japan, what is the first thing that comes to your mind?

Sakura, Anime, Mount Fuji, Nintendo...?

When Japan is associated with Crypto, most encryption practitioners have little awareness. Although Crypto transactions and exchanges have legal status in Japan since 2017, the Japanese market has always had a weak sense of existence, closed and independent It is the inherent impression of many people.

What is the real status of the Japanese encryption market? Who are the current core players? How to participate in the Japanese crypto market?

With curiosity, a reporter from Shenchao TechFlow visited Tokyo, Japan in April, communicated with local encryption practitioners, obtained a lot of information, and shared with you. There is no long-winded nonsense, only dry goods. The co-authors of this article include Emoote Venture Partner James, Hats off to him.

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Japanese Crypto Market Overview

According to discussions with friends and data from third-party organizations, the Japanese who participate in virtual currency investment can be divided into three circles, and the lower circle is a complete subset of the upper circle. Overall, Japanese local encryption users More than 5 million.

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(1) Compliance but lack of vitality

In Japan, whether it is trading encrypted assets or operating an exchange, it can operate under a legal and compliant framework, which is mainly regulated by the Japan Financial Services Agency and the Japan Virtual Currency Exchange Industry Association (self-regulatory organization). The general principles are:Prioritize the supervision of anti-money laundering/anti-terrorist financing, and then supervise the trading platform to protect the interests of users. For example, the exchange is required to separate customer assets from its operating funds, and at least 95% of the exchange's assets must be stored in cold wallets, which fully protects the safety of individual investors.

However, heavy regulation also brings many restrictions, which makes the Japanese encryption market lack of vitality.All tokens listed on compliant exchanges in Japan need to be approved by the Japan Virtual Currency Exchange Association (JVCEA), and this cycle is at least 6 months to a year.

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(2) Mismatch of hotspots and strong purchasing power

The Japanese market is a relatively independent and closed market, which also leads to its market hotspots not necessarily being at the same frequency as the global mainstream market, and there will be a certain degree of mismatch delay. Instead, there was a wave of explosions.

Second, the Japanese market still has strong purchasing power of retail investors. Two most direct examples:

1. Cardano carried out initial coin offering (ICO) from 2015 to 2017, mainly focusing on the Asian market. More than 90% of the early fundraising came from Japan, so it was also called the Japanese Ethereum, but it was still a European and American project in essence. .

2. From its establishment to its rise, the well-known trading platform Bybit has relied on the Japanese market as its core, and in the Japanese market it is inseparable from the promotion help of a super KOL, Aoji Prince Yuta Misaki, followed by well-known KOLs such as Tsubasa Yozawa\Hikaru.

Later, another futures trading platform, Bitget, entered the Japanese market and offered higher rebate conditions.

Compared with local compliant exchanges, there are more coins with less tax and no leverage; offshore exchanges, with 100 times more coins and no tax contracts, are full of temptations for retail investors. Although the Japanese Financial Services Agency continues to issue warnings to Bybit, MEXC, Bitget and Bitforex, But the effect is little, or no effect, and it is impossible to completely abandon the Japanese market and fully comply with the regulations. For example, compliant Coinbase and Kraken withdrew from the Japanese market in early 2023, which became a lesson for the past.

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(3) Turning point: Japan Financial Services Agency may relax some supervision

After communicating with relevant personnel of the Japan Financial Services Agency, I found that they were both happy and worried.

Fortunately, although the bankruptcy of FTX has hit the entire cryptocurrency industry hard, and the billions of dollars embezzled by the founder SBF have evaporated, thanks to Japan’s strict regulation of cryptocurrency, individual investors in the country have been protected. Very proud of it.

Therefore, Mamoru Yanase, deputy director of the Strategic Development and Management Bureau (SDMB) under the Financial Services Agency of Japan, which specializes in cryptocurrencies and financial technology issues, said that Japanese regulators have begun to urge regulators in the United States, Europe and other regions to regulate cryptocurrency transactions. The supervision implemented is similar to that of banks and securities firms.

What is worrying is that the Japanese encryption market is not active enough, especially after Coinbase and Kraken withdrew from the Japanese market one after another. On the contrary, offshore exchanges are flourishing in Japan, so they are also trying to make some adjustments.

In April 2023, Japan's largest party, the Liberal Democratic Party, released the "Japan 2023 Web3 White Paper" under the slogan "JAPAN IS BACK, AGAIN", trying to loosen supervision in various aspects, mainly including:

Tax reform: Previously, investors had to pay a high income tax of up to 55% due to the appreciation of tokens. After the tax reform, holding tokens issued by your own company will be exempted, and holding tokens issued by other companies can also be exempted from taxation if there is no "short-term trading purpose";

Token Review/Issuance/Circulation: The Financial Services Agency assists in reviewing overseas token sales and listings, increasing listing efficiency, and regulating the issuance and circulation of stable coins;

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local trading habits

Based on a survey of 300 Japanese exchange users, we found that the most popular exchanges in Japan include Coincheck, bitFlyer, GMO Coin, Rakuten Wallet, DMM Bitcoin, and bitbank.

Among the exchanges that are not licensed by the Japan Financial Services Agency, the most commonly used exchanges by Japanese are Binance and Bybit, both of which have been warned by the Financial Services Agency.

There are not many well-known encryption projects in Japan, especially the lack of self-made grassroots heroes. Most of the projects have a strong background in traditional resources.At present, the core projects include Astar Network, Oasys, HashPort, Jasmy, etc.

In terms of social media, Twitter is still the main channel for information and communication in Japan, followed by Instragram and Facebook, and some of them will collect virtual currency-related information through LINE Open Chat (similar to QQ chat rooms, everyone can freely enter and exit) and communication, but this channel is not mainstream, and the chat room with the largest number of people only has 5,000 participants.

In Japan, the vertical media for the general public include CoinPost, CoinTelegraph JP, CoinDesk JP, Kaxiang Currency Watch,あたらしい経済, and bitpress.

From the perspective of influence and traffic, the largest Japanese encryption media is currently Coinpost. Local encryption practitioners in Tokyo informed that Coinpost had previously received investment from Chinese encryption capital.

Although the above media all have newsletter services, PRTimes is the only service that is deeply involved in newsletters and is used by all Japanese companies (including non-blockchain-related companies). This service can be said to be well-known among Japanese office workers.

At the same time, there are also some self-media on Twitter that collect domestic and overseas blockchain-related information and translate it into Japanese. Of course, many vertical media will also create accounts on Twitter to enhance their presence. The more famous ones are dAppsMarket, CRYPTO TIMES, BlockchainGame Info and NFT JPN. Also, CoinGecko Japan is not to be underestimated.

In terms of in-depth research (Messari-like services), the leader is HashHub Research, whose interface and layout are very similar to Messari.

In addition to the above types of media, there are also many Affiliate Media (such as Kasobu), Newsletter and personal blogs that make a living with SEO. The most famous ones in Newsletter are CoffeeTimes, のぶめい, マナブ and ikehaya.

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Researcher/Academic Type KOL

In consideration of their reputation, Japan's orthodox KOL groups will conduct due diligence when deciding whether to promote the project. Such KOLs need to maintain objectivity and neutrality to the outside world, so they rarely write soft articles.

shingen：Mainly analyze ETH-related technologies and projects.

arata：Founder of Japanese blockchain media CryptoTimes.

やす@ Cryptographic currency:secondary title

GameFi-related KOLs

It is important to mention that Gamefi is not a widely spread keyword in Japan. The word that everyone likes to use is BCG or Blockchain Games, so you need to pay attention when searching for it.

Magic Lucian:The well-deserved Japanese most influential KOL in the field of Gamefi. Its influence goes far beyond Japan, and it serves as the Japanese ambassador for the star GameFi project Defi Kingdom. Its call success rate is frighteningly high, enough to have a substantial impact on market trends. Recently created his own community LFG (Lucian Finders Guild)

Makai Witch：A rising star, often translates and forwards the main chain games of each chain (XANA, Sand, Star Atlas, etc.)

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DeFi-related KOLs

shingen：See introduction above.

lagoon：Mainly analyze the listed IDO adjacent currencies and projects that may/will be airdropped in the near future.

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Devil related KOL

The high-risk and high-reward currency (similar to the hundred-fold currency commonly known in Chinese) is nicknamed "the devil world" by the Japanese because of its characteristics of "once entering the deep pit, it is as deep as the sea". According to the content, the Mojie currency is mainly divided into Defi, GameFi and CX currency.

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NFT related KOL

miin：Has been committed to discovering excellent Japanese domestic NFT projects and collecting relevant information, and will update the Japanese domestic NFT rankings every week.

ikehaya：Early investors of NFT, holding Crypto Punk and BAYC, have a total of more than 340,000 fans.

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KOL groups

Kudasai：The largest and oldest KOL group in Japan. Its Telegram community has 18,000+ people participating, which is the largest virtual currency-related community in Japan. Its core members are more than 20 KOLs. These KOLs perform their own duties. Some people conduct project contact, some conduct research due diligence, some conduct project publicity, and some conduct translation/AMA and so on. The leader is Watacchi.

ソフィクラ (Sophie Kura)：Influence is second only to Kudasai's second largest group. Its Discord community has 12,000+ people participating. The leader is Sophie Cherie.

Scam Dunk：Mainly share the information of the Demon Realm project and conduct AMA for it (high-risk and high-reward currency, commonly known as Baibi currency in Chinese). Leaders are gods.

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Giveaway / Airdrop information collection type KOL

The Giveaway type of KOL is quite special. Some of them are not deeply involved in the virtual currency industry, but will accept any type of airdrop (coins, cash, vouchers, etc.) cases, so special attention should be paid. All the KOLs mentioned here are deeply involved in the field of Crypto.

Fig：The KOL who became famous because of the four-digit RT and likes obtained through the airdrop of STEPN

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Mainstay of the business world

Yu Maezawa wrote:Japanese super rich, SpaceX's first private passenger to travel around the moon, and established a personal friendship with Musk, also known as Japanese Musk, owns a 10 billion yen (about 70 million US dollars) encryption investment fund MZ Web3 Fund , also owns MZ DAO.

Guoguang Hongshang:Founder and former president of Gumi. Founded Third Verse and Financie after leaving Gumi. Although he has left Gumi, his influence is still far-reaching, as can be seen from his co-founder on the game chain Harmony, which Gumi invested in recently.

Kano Yuzo:The co-founder of bitFlyer, one of the largest exchanges in Japan, is also the representative director of the Japan Blockchain Association.

Sota Watanabe:The founder of Astar Network, a Polkadot parachain, is responsible for the ardent expectations of many Japanese VCs to allow Japan to have a place in the Web3 industry.

Yoshida Expo:HashPort CEO, operating Japan's first IEO token $PLT, and Japan's largest NFT market PLTPlace, fluent in Chinese.

Noriotaka Okabe:The CEO of JPYC, the largest yen stablecoin project with the largest circulation, one of the joys in life is pulling people to the sauna for in-depth exchanges.

Yosui：Founder of the Hokusai project, which provides all-in-one NFT issuance solutions for Japanese companies.

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Japanese native encryption VC

According to our understanding, Japanese local traditional venture capital is not active, and Japanese VCs that really devote themselves to Crypto and Web3 are even rarer, and most of them can only make equity investment.

Skyland VenturesIt is a relatively active Japanese encryption fund, and has established a seed fund focusing on Web3 investment in the fourth fund.

On April 13, Skyland Ventures announced that its Web3 fund "Skyland Ventures No.4 Fund" had completed a total of 5 billion yen (approximately US$38 million) in fundraising, and announced that it had invested in Takio, the Ethereum ZKEVM solution.

EmooteIt is a Web3 fund established by the Japanese game company Akatsuki. The initial fund size is 20 million US dollars. It was formerly known as Akatsuki Crypto. It has invested in 24 projects, including STEPN, BreederDAO, ETHSign, Akinetwork, etc. The well-known Japanese KOL Miss Bitcoin is Emoote consultant.

Z Ventures, a joint venture between Softbank and Line, also aimed at the Web3 field and made some layouts. It invested in NFT trading platform X2Y2, blockchain game development platform double jump.tokyo, encrypted live broadcast platform Stacked, etc., all of which are equity investments.

Japanese financial group SBI Group also has a layout in the field of cryptocurrencies. It is Ripple's core investor and spokesperson in Asia, and has invested in many local trading platforms.

Among the Japanese-based incubators, the most famous is Fracton Ventures, which does not conduct investment business itself, but the original team recently raised funds from many Japanese VCs to establish Next Web Capital, and participated in investing in projects such as EthSign.

Among the remaining VCs that are mainly operated by Japanese/centered in Japan, the most famous one is Gumi Cryptos. Hiroshi Kunimitsu founded Gumi in 2007 and led the company to a successful IPO in 2014. It is worth mentioning that Guoguang Hongshang studied at Fudan University in Shanghai for 4 years in 1996, but now his Chinese ability has deteriorated greatly. In 2021, Guo Guanghong is still retiring from Gumi, All in blockchain and VR, but still has a greater influence on Gumi.

at present,Gumi Cryptos has invested in dozens of encryption projects such as Opensea\YGG,However, Guoguang Hongshang is also worried that he has invested in many overseas projects, but none of them can be launched in the Japanese market and promote the development of the Japanese market.

In the Japanese market, another influential figure that has to be mentioned is the billionaire Yusaku Maezawa, who is known as the Japanese Musk. He has tens of millions of followers on Twitter and can be called the largest KOL in Japan. He founded the Web3 fund MZ Fund with his own initials. The investment amount is in the range of 100,000 to 5 million US dollars. It owns the largest Web3 guild in Japan, the Web3 Club, with 30,000 encrypted native user members; and the largest "encrypted education platform" in Japan. MZ DAO claims to have a non-encrypted native user base of 300,000.

at present,MZ Fund has invested in many projects, including some projects with Chinese background, such as MetaOasis, Akiprotocol, SINSO, etc.

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Japanese market strategy

The previous successful case of STEPN in Japan highlights the potential of the Japanese market. As of February 25 last year, 35% of its 21,000 active users were Japanese. Analyzing its publicity path, it can be found that many top KOLs have carried out Giveaway activities, and some of them even bought shoes at their own expense for Giveaway. this meansAs long as multiple top KOLs participate and its token model has a good continuity, Japan is still a market with a fairly high purchasing power.

However, in terms of the user base and the cautious tendency of Japanese KOLs,It is recommended not to focus on Japan at the beginning. However, if it can gather a certain amount of popularity in Japan, it will make it easier for the project to radiate to the surrounding markets, especially Southeast Asia.

In addition, Japan as a whole is a market that is easy to defend and difficult to attack. Although the language barrier (the Japanese have a well-known psychological barrier to English) and the cautious tendency of Japanese KOLs make marketing more difficult, but on the other hand, the project party only needs to Japanese users will show a more tolerant and understanding attitude than users in some other markets if they don’t pack their bags and leave and do things actively, which will help create a benign community atmosphere.

Another interesting question is that at the beginning, we thought that the Japanese would be more proud of domestic projects, and they would be more vigilant about Chinese projects. But in fact, according to the author's research on Japanese users,Japanese people have complicated feelings about Japanese projects, but some people think that China is a plus point for Chinese projects, because many excellent projects come from the hands of the Chinese (of course, the attribute bonuses of European and American projects needless to say).

In contrast, projects in China, Europe and the United States have more successful cases, so they have been paying attention to this field for a long time, and more rational people will regard this attribute as a bonus item. However, it should be noted that the number of people who fit this user profile is limited.

Overall, in terms of the degree of localization, the author still feels that it is equipped with a native Japanese language and understands Japanese culture(Know what お笑い is like in Japan, know sports stalking political stalking catchphrases, and can skillfully use popular jokes (eg. 全米が吃いた), etc.) CanIt is necessary for community administrators to distance themselves from users based on cultural awareness.

Of course, if you have a good run-in with the administrator, you may wish to consider pulling him into the team. After all, from the perspective of users' minds, there is still a big difference between core members and external cooperative members. In this way, Japanese people can feel at ease because there are Japanese in the team, and it is easy to get closer. At the same time, the team is global enough to make the Japanese feel that the project has "future".

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