Crypto Innovation Is Leaving Japan – And It’s Not Because of Taxes
While Japan’s crypto tax system often gets blamed for stalling innovation, insiders say the real issue lies elsewhere.
Maksym Sakharov, CEO of onchain banking platform WeFi, argues that the country’s deeply conservative regulatory environment—not its tax code—is driving developers and liquidity abroad.
Even if Japan’s proposed 20% flat tax on crypto gains is passed, it won’t fix the core problem. Sakharov points to Japan’s drawn-out approval culture, calling it slow-moving, highly prescriptive, and risk-averse. The process of listing a token or launching an exchange offering can drag on for up to a year, thanks to multiple approval layers involving both the Financial Services Agency (FSA) and the Japan Virtual and Crypto Assets Exchange Association (JVCEA). For many teams, that’s simply too long to wait—so they launch elsewhere.
More than the headline-grabbing 55% progressive tax rate, it’s the bureaucratic hoops that stall projects at critical stages. Sakharov says delays in white paper reviews, token screening, and even minor product changes often mean several rounds of revisions. It’s a system built for caution, not competition.
Asia Moves Forward as Japan Falls Behind
Other countries in the region are taking a more agile approach. South Korea prioritizes ongoing oversight rather than pre-approvals, allowing for faster listings. The UAE has emerged as a global leader in digital asset regulation, and Singapore—though strict—offers clearer rules and quicker turnarounds.
Sakharov believes Japan needs to adopt faster, more flexible regulatory frameworks if it wants to keep up. He proposes deadline-bound approvals, better sandbox environments for experimentation, and simplified disclosure rules that won’t choke small projects.
Without those changes, Japan may continue to lose its most promising builders—not because of taxes, but because of a system that doesn’t move at the speed of crypto.
Alex is Editor-in-Chief of Coindoo and co-founder of Millennial Media Group, with nearly a decade of experience covering financial markets - crypto first, then everything else. It started in 2016 with Bitcoin. Like most people at the time, he didn't fully understand it - so he kept digging. Blockchain, tokenomics, the projects, the cycles. That curiosity never stopped, and eventually pulled him into traditional markets too: equities, commodities, macro. Not because he left crypto behind, but because you can't properly understand one without the other. What drives him is straightforward: he wants to know why something is happening, not just that it's happening. Most market coverage stops at the headline - price up, price down, here's a chart. Alex finds that kind of reporting actively unhelpful. If you walk away from an article without understanding the mechanism behind the move, what did you actually learn? He holds a degree in Tourism from New Bulgarian University - not the most obvious path into financial markets, but markets have a way of pulling in people who are simply too curious to stay out. He has authored over 200 in-depth analyses and more than 10,000 articles across crypto and traditional finance. He still thinks every day in markets teaches him something new. That's probably why he hasn't stopped.
