Tokyo vs Kyoto A Tale of Two Cities in Japanese Crypto

By Beosin Donny, Eaton, Dorit

Tokyo and Kyoto are two of the most representative cities in Japan.

Tokyo is the capital of Japan. It is the center of Japan's politics, economy, education and culture, as well as an important hub for international exchanges and innovation. Most of the Web3 encryption agencies and active VCs in Japan are located in this bustling city.

Kyoto, with its long history

history and rich cultural heritage. Ancient, exquisite, exquisite, quiet and simple Kyoto, although it has a subtle and restrained aesthetic, but now, this ancient capital has become lively again due to encryption.

At a time when technological advancements are shaping the economic future of countries around the world, Japan is taking a strategic leap towards the Web3 revolution.

** Recognizing the transformative potential of blockchain technology, cryptocurrencies, and the decentralized internet, Japan is making a concerted effort to put cities like Tokyo and Kyoto at the forefront of this digital revolution. **

Tokyo vs. Kyoto, A Tale of Two Crypto Cities in Japan

At the end of June this year, Japan's largest international cryptocurrency summit IVS Crypto 2023 was held in Kyoto. Many well-known investment institutions set up booths at the venue to connect with the world's cutting-edge Web3 entrepreneurial teams. Let the ancient capital of Kyoto become active again due to encryption.

IVS Crypto 2023 Conference

During the three-day conference, there were also many Japanese-inspired peripheral activities. Among them, the Web3 Shining Golden Pavilion sponsored by Beosin was held at Kinkakuji Temple on June 28, and successfully attracted many local Japanese teams to sign up.

The "Web3 GEISHA ROOFTOP PARTY" high-end reception held by Beosin in Kyoto that night provided an important communication platform for international blockchain project parties and investors. **We also saw that the fusion of tradition and innovation in Kyoto reached a perfect unity on this night. **

Representative of Beosin BD at the event site in Kyoto

After successfully hosting IVS Crypto in Kyoto, **Tokyo will also usher in the first large-scale international blockchain summit WebX conference in the second half of this year on July 25-26. **

This is a conference dedicated to bridging the divide between Web2 and Web3, Japanese and English, Japan and the rest of the world. At that time, the world's top Web3 entrepreneurs, investors, and developers will gather to discuss how to introduce blockchain and other decentralized technologies into society.

It is worth mentioning that Beosin has reached a strategic cooperation with Cryptogram Venture (CGV), the organizer of the second Tokyo Web3 Summer Hackathon (Tokyo Web3 Summer Hackathon).

Beosin will provide free Beosin VaaS smart contract formal verification platform authorization and 30-minute on-site & remote guidance to all projects participating in the Tokyo Web3 Summer Hackathon. This cooperation aims to provide security support for blockchain projects and developers around the world to promote the development and application of blockchain technology.

Web3 Encryption Agency "Landed" in Tokyo and Kyoto

It can be seen that the popularity of Web3 in Japanese cities such as Tokyo and Kyoto is increasing.

For example, Sony Network Communications, a subsidiary of Sony Group, recently cooperated with Astar Network to launch a Web3 incubation plan, which is used to incubate NFT and decentralized autonomous organization DAO practical projects, aiming to explore how blockchain technology can solve various problems in the industry.

Likewise, auto giant Toyota is delving into the use cases of blockchain technology. In early April, the company held a comprehensive Web3 hackathon on the Astar Network to help Toyota develop a more efficient team management strategy and optimize its business decision-making process. Regarding the above progress, Astar Network founder Sota Watanabe said:

"Many Japanese companies, especially big ones like Toyota, Sony, etc., want to work on Web3. I think the reason is simply that we completely missed the Web2 revolution, so Web3 is the next big opportunity for the Japanese economy."

In the Tokyo and Kyoto area, we also see some growing Web3 encryption organizations, here are some representative ones:

We****b3 companies/institutions in Tokyo

1 HashPort

HashPort Group was established in 2018, with the vision of asset digitization, and has accumulated a lot of achievements in blockchain technology. HashPort currently has 3 major businesses: HashPort that provides blockchain technology consulting and solutions, HashPalette that provides NFT-related technical support, and HashBank that provides financial infrastructure services. In April 2023, HashPort completed its C-round financing of over US$8.9 million.

2 KEKKAI

KEKKAI is a start-up company focused on improving the security of encrypted asset transactions. Although KEKKAI was officially established in early 2023, its wallet security plug-in was officially launched in December 2022. In February 2023, KEKKAI completed a pre-seed round of financing of 50 million yen, with Skyland Ventures as the investor. This financing will be used to improve product functions and expand security business.

3 Skyland Ventures

Skyland Ventures is a relatively active encryption fund in Japan. It has invested in KEKKAI and GoPlus in the blockchain security track, Orbiter Finance in the cross-chain track, and invested in Ethereum Layer2 Taiko in infrastructure, NFT data analysis platform NFTGO and anti-MEV solution provider Wallchain. In April 2023, Skyland announced that its fourth fund had completed the fundraising of 5 billion yen, and established a seed fund focused on Web3 investment.

4 MZ Web3 Fund

MZ Web3 Fund was established by Yusaku Maezawa, who is known as Musk in Japan. It focuses on Web3 project investment and is the most active encryption fund in Japan. MZ Web3 Fund has invested in 24 start-up projects in the Web3 field, including the decentralized storage project SINSO, the payment tools Slash and Transak, the development community WEB3DEV, the game public chain Oasys, and the Web3 user growth platform Aki Network. MZ Web3 Fund will provide the invested projects with the community resources of MZ Club and MZ DAO to help them expand rapidly in the Japanese market.

Web3 Enterprises/Institutions in Kyoto

1. QURAS

Founded in 2017, QURAS has a branch in Kyoto, Japan, and is committed to providing corporate customers with privacy-protected blockchain solutions. The application scenarios involve digital asset transactions, supply chain management, healthcare and financial services. In 2018, QURAS also launched the mobile wallet Quras Wallet, and reached cooperation with Uniswap, bithumb, Mooniswap and other exchanges. In 2019, QURAS completed a US$16 million Series A financing, with Roark Fund, SEB Venture Capital and other institutions participating in the investment.

2. SORAMITSU

Founded in 2016, SORAMITSU focuses on the research and development of blockchain technology, aiming to provide high-quality blockchain solutions for enterprises, governments, universities and communities. SORAMITSU has many widely recognized projects in the cryptocurrency field, including Bakong, Hyperledger Iroha, etc. In 2016, SORAMITSU developed the project Hyperledger Iroha and contributed it to the Hyperledger project of the Linux Foundation to help enterprises and financial institutions manage digital assets.

3. NEO KYOTO NFT ARTs

NEO KYOTO NFT ARTs is a Web3 educational project jointly planned by Wacoal Holdings Co., Ltd. and SMBC Nikko Securities. This project is a plan for students in Kyoto City to create NFT art of the space and content of future Kyoto, and to display and sell NFTs globally. A portion of sales proceeds will be donated to Kyoto City for educational purposes. The project aims to build a creative ecosystem that integrates NFT art with urban development.

4. Bar Krypto

Bar Krypto is a cryptocurrency bar in Kyoto, offering digital nomads a place to discuss Web3 enthusiastically. At present, Bar Krypto adopts a membership system, and customers can purchase its membership NFT on OpenSea to become its members. Members can name cocktails, participate in DIY basement makeovers and event planning.

The ghost of hackers who cannot be bypassed in the Japanese encryption field

Japan, once a pioneer in the cryptocurrency space, was quickly hit by hackers.

In 2014, Japanese exchange Mt. Gox was hacked. Then, in early 2018, hackers struck again, stealing more than $500 million from the Japanese exchange Coincheck, severely hampering crypto growth in Japan.

The two hacks were a big reminder to regulators that following these hacks, Japan mandated that customer and exchange assets be kept separate and that most exchange assets be kept in cold wallets.

Therefore, when FTX crashed this year, Japan's regulatory approach showed its advantages.

Ryosuke Ushida, chief financial technology officer of the Financial Services Agency, a government agency that regulates cryptocurrencies, said: "FTX Japan's Japanese customer assets are likely to be returned without being significantly affected by the global bankruptcy application of Chapter 11 of the US Bankruptcy Code."

And now, **Beosin has also carried out in-depth cooperation with Japanese Web3 companies such as KEKKAI and Terminal3. Beosin will also provide "one-stop" blockchain security products + services such as code security audit before launch, security risk monitoring during project operation, early warning and blocking, virtual currency stolen asset recovery, security compliance KYT/AML and other "one-stop" blockchain security products + services for Japanese Web3 encryption institutions to resist hacker attacks for local Web3 institutions. **

Japan, which is at the forefront of encrypted asset regulation**

In 2016, Japan revised the "Payment Services Law" and "Fund Services Law", which were formally established in 2017, clarifying the legal status of cryptocurrencies. On the one hand, cryptocurrencies are considered “crypto-assets” under the Payment Services Act. engage in the buying, selling or business of cryptoassets (and the intermediary of such activities) or for the benefit of others Operators who manage encrypted assets for profit must register as encrypted asset trading services.

On the other hand, Japan's financial regulator, the Financial Services Agency, has passed the Financial Instruments and Foreign Exchange Act (FIEA) to regulate cryptocurrency exchanges, which can be transferred through the blockchain. Investment interests in partnership enterprises, etc., are regarded as securities (that is, general partnership securities transferred by non-electronic means). Under the FIEA regulations, providing or acting as an intermediary to provide encrypted assets The business of producing related derivative instruments belongs to category 1 financial instrument business. The relevant business constitutes an investment consulting business or an investment management business, which needs to be registered accordingly under the FIEA.

As for stablecoins, the Japanese government believes that depending on whether such stablecoins can be exchanged for fiat currency, stablecoins may be classified as encrypted assets or payment methods in remittances. In addition, since NFT is currently not considered to have the function of a means of payment, no agreement has been made under the current regulatory framework, but the Japanese financial regulator, the Financial Services Agency, has added the matter of establishing a regulatory framework for NFT to the agenda.

Nevertheless, Japan is still undergoing trial and error and adjustments in the regulatory process of encrypted assets. With the development of the encrypted field, relevant policies will gradually develop.

Since 2019, the blockchain security company Beosin has established a strategic partnership with the Japanese blockchain company HashPort. The two parties mainly cooperate in the security audit and compliance assessment of blockchain platforms and smart contracts. At the same time, the blockchain project compliance assessment report issued by Beosin has become one of the important reference materials for Japanese regulatory agencies to assess project compliance. Beosin during this period** has continued to provide professional and comprehensive security technical support to enhance the security and compliance of Japanese blockchain companies. **

Beosin aims to help Japanese virtual asset service providers establish safe and compliant services, meet Japanese regulatory requirements, reduce customers' compliance costs, assist customers to create comprehensive products and services, and provide security for customers' business growth; **At the same time, it provides a strong combination of services and products (such as KYT products) in Japan, which can help users reduce the risk of violations, improve customers' ability to identify risky transactions, strengthen customers' ability to track and analyze suspicious addresses, and help customers build a security risk control system that complies with local compliance policies. **

**In April 2023, the Web 3.0 project team of Japan's ruling party released a white paper with recommendations to promote the development of Japan's encryption industry. ** In June 2023, Japan's "Amendment to the Fund Resolution Act" was voted by the House of Lords, becoming the first country in the world to enact a stable currency bill.

Akihisa Shiozaki, secretary general of the project team, noted in a recent interview: “The cryptocurrency industry has always been driven by early adopters, but from now on it will shift to mass adoption.

He noted that big players in Japan have already begun entering the market, with mobile phone operator NTT Docomo recently committing to invest as much as 600 billion yen ($4 billion) in Web3 infrastructure. Not only that, large financial institutions are also looking to issue stablecoins to digitize the national economy.

Written at the end

What can be seen is that Japan’s move to embrace cryptocurrencies and Web3 is clearly a strategic move aimed at breathing new life into the economy, and there are many obstacles that Japan must overcome if it wants to use the emergence of Web3 to drive new economic growth. **Whether in a crypto-friendly city like Tokyo or Kyoto, there needs to be some truly groundbreaking Web3 companies that can both demonstrate the potential of blockchain technology and serve as role models to inspire other Japanese entrepreneurs. ** in another

On the other hand, we can also see that the country's Web3 policy, corporate cooperation and regulatory progress are slowly paving the way for local Web3 development.

As a world-leading blockchain security company, Beosin has established branches in more than 10 countries and regions around the world. Its business covers code security audit before project launch, security risk monitoring, early warning and blocking, virtual currency stolen asset recovery, security compliance KYT/AML and other "one-stop" blockchain security products + services. Currently, Beosin has provided security technology services for more than 3,000 blockchain companies around the world, and audited more than 3,000 smart contracts. Security solutions such as compliance assessments that meet local regulatory requirements, VaaS automated currency listing audit services, exchange penetration services, and exchange security construction consulting services.