Japan’s Digital Administrative and Financial Reform Council released a document governing, among everything else, AI, drones, cloud-based data sharing, robots, and NFTs. 

The document’s proposal to revitalize the local economy using digital currencies, NFTs, and DAOs seems forward-thinking and visionary. 

But are these plans genuinely well-intended, or is Japan’s government just sugarcoating an attempt to regulate all things tech? 

Love, Death & Busy Robots 

In September, Japanese regulators proposed to reduce tax on crypto gains from 55% to 20% (which is still higher than in most European countries). 

The Strategic Business Innovator Group (SBI) also plans to integrate Ripple ($XRP) into Japan’s traditional financial system, which signals growing acceptance of crypto by mainstream institutions. 

Now, Japan is taking another step toward a technologically advanced, inclusive financial system. The document outlines the following plans:

Beyond economic initiatives, the Council considers infrastructure changes, such as deploying autonomous buses and taxis, and healthcare, including implementing online medical check-ups at train stations. 

A Critical Look at Japan’s Digital Future 

First, what are ‘local digital currencies’? It may or may not be an alternative name for CBDCs, cryptocurrencies issued and controlled by the central bank. This means surveillance over decentralization. 

It’s worth noting that, unlike most governments worldwide, Japan isn’t actively developing a CBDC. However, it’s exploring ways to roll out a CBDC quickly if the government decides to issue one in the future. Has the future come? 

Second, replacing humans with robots is a scenario right out of a horror movie. Sure, we have the three laws of robotics, but unemployment can be scarier than any fictional dystopia.

The Council also pushes the use of the ‘My Number’ ID system and the sharing of medical data through the cloud, which raises privacy concerns. 

All in all, Japan’s vision of a technologically advanced society may come at the cost of individual freedom and social equity.

FSA Cracks Down on Crypto 

Last week, Japan’s FSA drafted a law prohibiting local crypto exchanges from transferring assets to foreign platforms in the case of a financial crisis. 

The ‘holding order’ mechanism is a response to high-profile failures like FTX and aims to protect Japanese investors from losing funds due to the insolvency of foreign exchanges.

The problem here is that stricter regulations don’t make Japan more appealing to crypto firms and investors. If they feel overly restricted, they may seek opportunities in less regulated markets. 

There’s a visible discrepancy between the FSA’s law draft and the Council’s document. While one embraces innovation in a borderline Orwellian sci-fi fashion, another stifles it by imposing stricter controls.

The Price of Progress

Japan’s digital transformation is a paradox – the government strives for a hi-tech utopia, but its obsession with surveillance makes it look more like a sequel to Neuromancer. 

Can Japan find a balance between ethics, regulation, and innovation? That’s a question that remains unanswered. 

References 

• Digital Administrative and Financial Reform Conference (8th) Agenda (Cabinet Secretariat)
• CBDCフォーラム (Bank of Japan)
• Japan’s Central Bank Digital Currency should go big, not go home (EastAsiaForum)
• Japan Tightens Crypto Laws on Domestic Assets To Prevent FTX Repeat (CoinMarketCap)

Lora is a writer based in Ireland. Her background in finance and interest in technology helps her present complex concepts in an intelligible and fun way, which is especially useful when it comes to the world of cryptocurrency and blockchain technology.
Starting as an agency writer, she soon branched out to freelance and later launched a family-run digital marketing agency. 
In her spare time, Lora attends dance classes or immerses in reading, preferring technology news or postmodern literature.

View all articles by Lora Pance