[English Translation]

The web3 White Paper 2024
- A New Era Where Technology Forms the Foundation of Society -April 2024
LDP Headquarters for the Promotion of Digital Society
The web3 Project Team1

Table of Contents
1. Nippon Nexus: Weaving the web3 Era .........................................................................................3(1) The trajectory of Japan's web3 policy ................................................................................................................ 3(2) web3 accelerating worldwide .................................................................................................................................. 4(3) This White Paper ........................................................................................................................................................ 4

2. Issues to be addressed immediately for promoting web3 .......................................................6(1) Promote cross-sectional studies with other fields, such as AI, with a view to realizing "Society
5.0........................................................................................................................................................................................... 6(2) Japan's contribution to international rule-making ........................................................................................... 6(3) Study on promotion of utilization of VC and DID, and DIW .......................................................................... 7(4) Diversification of investment vehicles and schemes for blockchain-related businesses ................... 9(5) Tax Reform ................................................................................................................................................................ 10(5-1) Revision of income taxation on crypto assets held by individuals...................................................... 10(5-2) Clarification and revision of tax treatment of donations of crypto assets ...................................... 12(6) Ensure opportunities for accounting audits of companies issuing crypto assets .............................. 13(7) Further measures to promote the use of DAOs ........................................................................................... 14(8) Digitalization of payment and investment instruments ............................................................................... 16(8-1) Measures to promote circulation of permissionless stablecoins ......................................................... 16(8-2) Measures to promote the circulation of security tokens ...................................................................... 18(9) Clarification of criteria for financial institutions' entry into web3 business and appropriate
operations of regulations ............................................................................................................................................. 19(10) NFT Business ......................................................................................................................................................... 20(10-1) Revitalization of NFT utilization in the content industry in Japan ................................................... 20(10-2) Return of revenue from secondary distribution market ....................................................................... 22(11) License appropriate for web3 business ......................................................................................................... 23

3. Issues that should be further explored for the further development of web3 ................ 25(1) Support for overseas expansion of Japan's content industry using web3 ........................................... 25(2) Safe and Secure Use Environment .................................................................................................................... 26(3) Utilization of web3 in revitalizing local communities .................................................................................... 27(4) Further promotion of measures against money laundering and terrorist financing in cooperation
with the international community.............................................................................................................................. 28(5) Crypto asset business ........................................................................................................................................... 29(5-1) Crypto asset derivatives leverage ratio ...................................................................................................... 29(5-2) Trends in Crypto Asset Cash ETFs.............................................................................................................. 30

Attachment 1 ..................................................................................................................................... 32
Attachment 2 ..................................................................................................................................... 35
Attachment 3 ..................................................................................................................................... 39
Attachment 4 ..................................................................................................................................... 42
Attachment 5 ..................................................................................................................................... 43

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1. Nippon Nexus: Weaving the web3 Era(1) The trajectory of Japan's web3 policy"JAPAN IS BACK, AGAIN.” We declared it emphatically in the "web3 White Paper," apolicy proposal published in April 2023. Since then, in order to make Japan the frontier of
web3, we have involved business operators, the government, and public agencies, picked up
issues one by one, and linked them to measures. We are now in the process of developing
one of the world's leading web3 business environments that is both safe and secure, butalso capable of challenging innovation.
Two years ago, in our NFT White Paper, we earnestly expressed our sense of crisis,
stating “The arrival of the Web 3.0 era is a great opportunity for Japan. But if we continue
as we are now, we will surely miss the boat.” At the time, the clarity and strictness ofJapan's web3 regulations stood out from the rest of the world and were highly regarded fortheir robustness against crises, but from the perspective of fostering innovation, there werea myriad of issues in legislation and taxation. Many businesses were voicing issues fromvarious perspectives, but a majority held a skeptical view that the business environment
would rapidly improve, leading not a few entrepreneurs to move abroad.
However, with a strong determination to "make Japan the center of web3," we continued
to work with various stakeholders to improve the business environment. Through hearings
and the rule-making hackathon, a pioneering effort, we collaborated with business operators
to gain a comprehensive and detailed understanding of use cases and business issues. We
also worked closely with the government and competent authorities to find optimalmeasures and steadily implement them, while taking into consideration stakeholders otherthan business operators, such as a safe and secure usage environment. In this past year,
the issue of year-end market value taxation of our company-owned crypto assets, which
we raised in the "NFT White Paper," was resolved, and amendments to the Payment
Services Act, etc., allowed the circulation of permissionless stablecoins (electronic payment
instruments), and the acceleration of token reviews by JVCEA and FSA progressed. The
acquisition of legal entity status for DAOs (autonomous decentralized organizations), which
was the first item on the list in the "Proposal on DAO Rulemaking," is also progressing witha sense of urgency. An environment in which entrepreneurs can provide new services withpeace of mind is rapidly being established. For investors, the FY2024 Tax Reform Proposal
stipulates that third-party long-term holdings of crypto assets are exempt from corporate
taxation, which are currently subject to taxation based on year-end mark-to-market
valuation, and the Cabinet approved a draft amendment to Limited Partnership Act for
Investment (LPS Act) to allow investment limited partnership (LPS) to acquire and holdcrypto assets. The environment for investment in web3 business is becoming morefavorable.
As a result of these reforms, which are unparalleled in the world in terms of speed, we
have even heard from entrepreneurs who have gone abroad that they would like to consider
returning to Japan. I would like to express my sincere appreciation for the efforts of themany people who have been involved in these reforms.

3However, we must not forget that our transformation is only halfway through. We must
continue to build an environment that is safe and secure for users and allows businesses
to take on the challenge of innovation without limit.
(2) web3 accelerating worldwide
The movement toward mass adoption of web3 is accelerating around the world. The
market capitalization of stablecoin, which is mainly denominated in dollars, is well over 10
trillion yen, and its presence as a means of payment is growing. In the United States, an
Exchange Traded Fund (ETF) linked to bitcoin has been approved, and a wider range ofinvestors than ever are now investing in crypto assets. The movement of mass adoption is
not limited to the financial world. Global DAOs are building networks across borders andregions using web3 technology. In the future, DAOs will play an increasingly important roleas organizations of like-minded people who are not bound by existing institutions andframeworks.
In our country, the year was also marked by great progress toward mass adoption.
Following the approval of permissionless stablecoin, many players, from startups to large
corporations, announced their entry into the market. Also in Japan, efforts to utilize DAOs
are spreading in a variety of settings, including regional development.
Furthermore, the application of web3 technologies is expanding beyond the web3
economy. The world that Japan presented as "Society 5.0" about 10 years ago, in whichcyberspace and physical space are highly integrated, is becoming a reality in which
economic development and solutions to social issues are compatible. In addition totechnologies such as AI, IoT, and metaverse, blockchain is one of the most important
technologies. Expectations are growing for stablecoin as a means of payment, DAO as acommunity infrastructure, and VC (Verifiable Credentials) and DID (Decentralized Identity)
as a means of proving one's existence. Blockchain technology, with its decentralized nature,
has the potential to provide an optimal solution for those who recognize the downside ofcentralized management of personal information by giant platforms and wish to manage
their own personal information independently.
(3) This White Paper
This paper is a statement of our commitment to not only incorporate the expanding web3
ecosystem into the development of our country, but also to strongly encourage the further
development of blockchain technology, which can become a social infrastructure byintegrating with other technologies, including the aforementioned VC/DID.
In January 2024, the Liberal Democratic Party's web3 Project Team of Headquarters for
the Promotion of Digital Society released its "Proposal regarding DAO rulemaking" (seeAttachment 4) in light of the spread of DAO, and presented issues related to DAO andpolicies for dealing with them.
Based on past discussions and hearings at the PT meetings (see Attachment 3), thispaper presents issues and target policies, not limited to DAOs, divided into (1) issues thatshould be addressed immediately for the promotion of web3 and (2) issues for which
discussions should be initiated and deepened with a view to further development of web3.

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In addition, (3) we also follow up on the progress of the proposal items described in "NFT
White Paper" and "web3 White Paper" by the relevant ministries and agencies (seeAttachment 1 and 2). Follow-up will continue to be conducted on an ongoing basis, including
the content of the current recommendations.
In creating this White Paper, we received valuable opinions and knowledge sharing frommany business stakeholders, experts, and knowledgeable persons through participation inhearings and rule-making hackathons. In addition, the members of the working group (seeAttachment 5), consisting of outside attorneys and others with expertise in the web3
business, provided invaluable assistance in organizing and writing the discussion points.
Once again, we would like to express our deepest gratitude to them.

52. Issues to be addressed immediately for promoting web3
(1) Promote cross-sectional studies with other fields, such as AI, with a view to realizing"Society 5.0”
A. IssueAs mentioned in section 1, Japan has presented a worldview of "Society 5.0" as
a "human-centered society that balances economic development and theresolution of social issues through a system that highly integrates cyberspaceand physical space," and has long been promoting measures aimed at achieving
this vision.
On May 20, 2023, after the release of the previous web3 White Paper, the G7
Hiroshima Leaders' Communiqué stated that "In areas such as AI, immersive
technologies such as the metaverses and quantum information science andtechnology and other emerging technologies, the governance of the digital
economy should continue to be updated in line with our shared democraticvalues." On July 11, 2023, the European Union (EU) announced an initiative of"Web 4.0" as a new concept of web that seamlessly blends the physical and digitalworlds, which will be realized through AI, IoT, blockchain, virtual worlds and XR.
The importance of blockchain and web3 as an infrastructure or concept to realize
a highly reliable governance of the digital economy is expected to increase. On
the other hand, in order to realize "Society 5.0" where cyberspace and physicalspace are highly integrated, collaboration with other fields such as AI, IoT, andthe metaverse is considered essential. However, at this juncture, government
departments are mainly engaged in studies on a theme-by-theme basis, and it isdifficult to say that sufficient cross-disciplinary studies are being conducted.

B. RecommendationsIn order to realize "Society 5.0," web3 policy should not be confined to theblockchain domain, but should be promoted with an awareness of the linkage with,for example, the metaverse, which is linked to the physical space, and AI, which
could become the engine of a new digital economic sphere. First of all, a crossagency study should be initiated to identify the values and new issues to becreated by the areas where multiple themes such as web3, the metaverse, and AI
are interlocked and work together.

(2) Japan's contribution to international rule-making
A. IssueAs the global crypto assets industry enters a winter period, countries around theworld are tightening regulations on crypto assets and similar assets. Under suchcircumstances, the environment in Japan is also accelerating.
The joint statement following the G7 Finance Ministers and Central Bank
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Governors' Meeting and the G7 Leaders' Summit in May 2023, under thechairmanship of Japan, clearly stated support for responsible innovation andrecognized the critical importance of effective monitoring, regulation andoversight to address the risks posed by crypto assets.
The G7 Finance Ministers and Central Bank Governors' Meeting emphasized theimportance of implementing an effective regulatory and supervisory framework forcrypto assets and stablecoins in each country. The Financial Stability Board (FSB),
taking into account the discussions under the Japanese Chairmanship, finalizedin July 2023 its high-level recommendations on the regulation and supervision of
crypto assets and stablecoins. At the same time, the International Organizationof Securities Commissions (IOSCO), the relevant standard-setting body,
published its recommendations on crypto and digital assets in November 2023,
based on the said recommendations.
In addition, the International Monetary Fund (IMF) and the FSB published the "IMFFSB Integrated Document: Policy on Crypto Assets" in September 2023 andsubmitted it to the G20 New Delhi Summit. The roadmap presented in the report(including implementation of the FSB high-level recommendations) was adopted as
the "G20 Roadmap on Crypto Assets" at the G20 Finance Ministers and Central
Bank Governors Meeting in October 2023.

B. RecommendationsJapan, reflecting on the repeated large-scale hacking scandals in the past, haslong placed a strong emphasis on consumer and investor protection. Japan has
been ahead of other countries in establishing a registration system for virtual
currency exchange operators and a system for safeguarding customer assets (e.g.,
95% cold wallet regulation), and has succeeded in limiting the impact of recent
global bankruptcies on the domestic market.
Thus, at a time when the crypto asset industry is still in the midst of a winterperiod and a global trend toward increased regulation is occurring, Japan has
proven globally that it has a resilient legal and regulatory system that minimizes
the domestic impact of a global failure event.
At the G7 Finance Ministers and Central Bank Governors' Meeting in 2023,
discussions were held under the Japanese chairmanship, and various
recommendations were made based on these discussions. Based on theleadership demonstrated at the G7 Finance Ministers and Central Bank
Governors' Meeting, Japan should continue to play a leading role in technologyneutral and responsible innovation in the implementation of international
recommendations, etc., with a view to the future of web3.

(3) Study on promotion of utilization of VC and DID, and DIW
A. Issue

In anticipating the mass adoption of web3, it is necessary to expand the use cases

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of blockchain-related technologies beyond the utilization of stablecoin, security
tokens, and DAOs. Among them, VC (Verifiable Credentials) and DID(Decentralized ID) are attracting attention as promising technologies that cancontribute to the digitization of society at large.
In today’s digital society, as various systems become interconnected, there is a
growing dependence on specific platform providers, particularly concerning user
contact points, identity management, and cloud infrastructure, which is achallenge from the perspective of international industrial competitiveness andeconomic security. For this reason, it may be possible both to promote further
digitization and data utilization in society and reduce privacy risks by utilizing
distributed identity, which is information linkage through the person
himself/herself, using VC/DID based on web3 technology.
On the other hand, for Japan to take the lead in implementing VC/DID while
maximizing its potential, it is essential to provide business incentives to theprivate sector, follow up on related standards, and ensure international
interoperability, based on analysis of leading use cases such as Trusted Web The
following are some of the key issues that need to be addressed. While considering
practices in digitization and web3 in other countries, we believe thatinternationally competitive human resources should be developed through crossorganizational practice and use case development and that knowledge and digitalbuilding blocks should be shared through open source.
In addition, the realization of decentralized identity using VC/DID will beaccompanied by the use of unhosted wallets, in which tokens are not under thecontrol of a specific entity, but are managed by the entity itself through a wallet
application or other means. Unhosted wallets are used not only for crypto assets,
but also for the management of various tokens such as NFTs, Soulbound Tokens,and DAO governance tokens, and there are active international discussions on
various issues including identity verification methodologies. The relationshipbetween attribute proofing using such unhosted wallets and Digital Identity Wallets(DIWs: wallets that store and present attributes and credentials of individuals andcorporations), which are being discussed in Europe and other countries, and theissues involved in utilizing these in financial and government services. Further
discussion is also required on the issues of utilizing these in financial services andgovernment services.

B. Recommendations

To avoid the vertical division of services in Japan, the public and private sectors
should collaborate, led by ministries and agencies with jurisdiction, on related
technological and standardization trends such as VC, DID, and zero-knowledge
proofs, deepen dialogue with countries that share the same vision, participate ininternational standardization and other discussions, and harmonize requirementswith those in Japan. Early implementation in Japan should be promoted.
In order to use VC, DID, DIW, and other new technologies as a catalyst forbusiness incentives to link information via the person himself/herself, the Digital

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Agency needs to take charge of organizing institutional and technical issues tohave federal and local governments take the lead in becoming Issuers andVerifiers of VC.
In addition, the implementation of leading administrative use cases should bepromoted in cooperation with and led by relevant ministries and agencies. With
regard to vouchers and attached documents issued by the public and private
sectors that are necessary for administrative procedures, if there are any thathave not yet been digitized, the necessary legislative measures for digitization
should be implemented.1
Given that the DIW, which will serve as a hub for information linkage through theprincipal, could become a new choke point in the digital society, the competent
ministries and agencies should conduct policy studies, including from theperspective of industrial promotion and competition policy. In addition to keeping
a close eye on related international standardization trends, the government should
also cooperate with other countries on cross-border use cases and promoteinteroperability assurance, etc. In particular, it is necessary to identify and study
the needs for interoperability, based on the development of cross-border use
cases (tourism, study abroad, employment) not only in Europe, whereinteroperability within the region is well secured, but also in neighboring countries
with strong human exchange and economic ties.
Regarding the information systems maintained by the government, it is necessary
to increase composability by promoting the open sourcing-of technical documents
and building blocks that can be used in other systems and in the private sector.
In addition to improving interoperability of government information systems, it isnecessary to create an environment in which domestic operators seeking toprovide ID/wallets independent of platform operators can take up challenges andreceive necessary support, including disclosure of specifications. In doing so, it isdesirable to establish a consultation service in case of any barriers.
In anticipation of the revision of the Personal Information Protection Law, it isnecessary to develop an environment that complies with the principle of data
minimization, where information about oneself held by multiple public and privateorganizations can be obtained in a wallet of the user’s choice and disclosed
selectively, and where the recipient of the disclosed information can verify theauthenticity of the content. The data specifications should be defined in amachine-readable format, and the implementation of the verifier should be
provided as open source.

(4) Diversification of investment vehicles and plans for blockchain-related businesses
A. IssueIn the "web3 White Paper" dated April 2023, this project team proposed that the1

For example, certificates of residence, tax payment certificates, receipts, payment records,
qualification certificates, graduation certificates, employment certificates, etc. are assumed.
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legal precedent to allow Limited Partnerships for Investment (LPS), a fund format
adopted by many venture capital firms, to invest in crypto assets and other tokens
issued by startups and others. We proposed that amendments and clarification of
the interpretation of laws and regulations should be promoted.
In response, the Ministry of Economy, Trade and Industry (METI) has conducteda study on the state of LPS in Japan, and based on this study, a draft amendment
to the Limited Partnership Act for Investment Business (LPS Act), which allows
LPS to invest in crypto assets, has been submitted to the current Diet session.
On the other hand, it is not necessarily clear at this time whether a crypto asset
exchange business is applicable when an issuer of crypto assets such as a startup
sells crypto assets to an LPS, or whether a GP (general partner) of an LPS thatinvests in crypto assets is required to register as a crypto asset exchange
business when making an investment decision in crypto assets.

B. Recommendations
With regard to the above revision of the LPS Law, since there are considerable
matters that should be stipulated in subordinate laws and regulations as abusiness incidental to the acquisition and holding of crypto assets issued on behalfof businesses, METI, while listening to the opinions of the industry, should
endeavor to formulate subordinate laws and regulations necessary to make LPS
investment in crypto assets function in a practical manner. Therefore, METI
should endeavor to formulate the subordinate laws and regulations necessary to
make LPS investment in crypto assets work practically, while listening to industry
opinions.
Even if the LPS Act is amended, it will be difficult for LPS to invest in tokens ofcrypto assets such as startups unless the above-mentioned issues regarding theapplicability of the cryptographic asset exchange business are resolved. Therefore,
it is necessary for the FSA to proceed with discussions with the crypto asset
industry and relevant ministries and agencies and take necessary measures assoon as possible. In doing so, the FSA should take into consideration thegovernment's policy of fostering startups and the fact that venture funds such as
LPS are professional investors and do not need the same user protection as
individual investors.

(5) Tax Reform(5-1) Revision of income taxation on crypto assets held by individuals
A. Issue

Two major tax obstacles to the development of the web3 business in Japan havebeen the year-end mark-to-market taxation for corporate tax purposes and theincome taxation of crypto assets held by individuals. The issue of year-end markto-market valuation taxation for corporate tax purposes was reviewed and

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resolved to a certain extent with the 2023 and 2024 tax reforms, which exempted
crypto assets held by the issuing company and other companies from the yearend mark-to-market valuation taxation. On the other hand, no progress has been
made on the issue of income taxation on crypto assets held by individuals, andthe situation continues to require further examination.
In Japan, income from crypto asset transactions is taxed as miscellaneous income
at a maximum rate of 55% (income tax and inhabitant tax combined), and is treatedmore harshly than in other countries; as a result, it is indicated that more andmore taxpayers are flowing abroad. In relation to this point, ETFs using crypto
assets as underlying assets are currently being introduced overseas. In cases
where such ETFs are traded in Japan or ETFs using crypto assets as underlying
assets are established in Japan, if the income from these transactions is subject
to the separate taxation, there would be a tax imbalance with physicaltransactions in crypto assets, which are subject to comprehensive taxation as
described above. As a result, the liquidity of crypto assets in Japan would besignificantly reduced, which could hinder the development of the web3 business.
In order to avoid such a situation, if income from ETFs with crypto assets asunderlying assets are subject to separate taxation, it is highly necessary that
income derived from crypto asset transactions be subject to separate taxation
as well (for more information on crypto asset ETFs, see 3(5)-2 below).
Under the current taxation system, income tax is imposed on gains or losses
related to the transfer of crypto assets not only when crypto assets held are
exchanged for legal tender such as yen or dollars, but also when crypto assets
are exchanged for other crypto assets as a transfer of crypto assets. However,since no legal tender is acquired when crypto assets are exchanged for othercrypto assets, this hinders taxpayers from facilitating tax reporting.
In the NFT white paper, we proposed that (1) the taxation of crypto assets,
including the separate taxation of gains and losses arising from transactions ofcrypto assets by individuals at a tax rate of 20%, should be examined. In addition
to (1), the web3 white paper proposes (2) that gains and losses from the exchangeof crypto assets should be exempt from taxation.
Furthermore, in addition to the above issue of whether comprehensive taxationor separate taxation should be applied, various use cases have emerged regarding
web3, and there is the issue of whether it is appropriate to treat them uniformly
for tax purposes. Depending on the nature and use of crypto assets, there may
be some cases that should be treated differently from the principle treatment,such as by establishing preferential tax treatment. The best example of such acase is a donation of crypto assets, and the question arises whether certain
preferential tax treatment should be allowed. This point is discussed separatelyin (5-2) below.

B. Recommendations
With regard to the taxation of crypto assets held by individuals, it should be
examined (1) that profits and losses arising from transactions in crypto assets

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should be subject to separate taxation at a 20% tax rate, (2) that losses on crypto
assets should be allowed to be carried forward from income (for three years fromthe following year), and (3) that crypto asset derivatives transactions should also
be subject to separate taxation at the same tax rate.
In addition, it should be examined that gains and losses related to crypto asset
transactions should not be taxed at the time crypto assets are exchanged forother crypto assets, but should be taxed collectively at the time the crypto assets
held are exchanged into legal tender.
With regard to the above examination, especially the proposal regarding theseparate taxation, the issue is whether crypto assets should be treated as
financial assets that are investable by the public in the same manner as securities
and other assets. In this regard, it is necessary to examine whether it is justifiable
to treat crypto assets differently from income generated by other assets in termsof the nature of crypto assets and the laws and regulations governing crypto
assets. First, it is necessary to examine whether it is appropriate to subject theincome to separate taxation, based on the current laws and regulations regarding
crypto assets, which parts of the laws and regulations should be modified, if any,
and whether the separate taxation should be adopted even with suchmodifications. In addition, while it is conceivable that crypto asset transactions
should be uniformly subject to separate taxation, it is also conceivable to examine
whether only certain types of crypto assets should be subject to separate
taxation, given that there are a wide variety of crypto assets of various nature.
Furthermore, in examining the above, it is necessary to compare and contrast the
tax treatments of crypto asset transactions by individuals in other countries. It isalso necessary to examine how the above treatment would affect taxpayers' tax
filing and the tax revenues of the state, and whether the above treatment would
be widely understood and accepted by the public.
In addition to the above recommendations, in cases where there are some items,
such as donations of crypto assets, that should be treated differently than usual
for tax purposes, such as by providing certain preferential tax treatments, taking
into consideration the nature and use of the crypto assets, certain measures
should be taken after prompt consideration.

(5-2) Clarification and revision of tax treatment of donations of crypto assets
A. Proposal

There are considerable requests from individuals and corporations holding crypto
assets to donate such assets to the national government, local governments,
public corporations, non-profit organizations, and so on. Since fees for crypto
asset donations are less expensive than those of credit card donations andprocesses of crypto asset donations are simpler than those of bank transfers,
they can be used quickly and effectively to provide emergency assistance in theevent of a large-scale disaster, etc. In fact, in the U.S., donations of crypto assets
are becoming widely used, For example, the scale of crypto asset donations to
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charitable organizations has reached $400 million as of 2021 only on the platforms
where specific donation amounts have been announced.
However, under the Japanese tax system, it is not clear whether donations ofcrypto assets qualify as specified donations, so it is not always clear whether
individuals can claim a donation deduction when they donate crypto assets to thenational government, local governments, or public corporations, etc., or whether
corporations can claim a special deduction when they donate crypto assets tothe national government, local governments, or public corporations, etc. As aresult, they are a disincentive to donation of crypto assets.
In addition, when an individual donates real estate or land to the national
government, local governments, or public interest corporations, there is a special
exception (Article 40 of the Act on Special Measures Concerning Taxation) thatexempts from taxation the deemed capital gain income on the unrealized gains ofsuch property. However, in the case of crypto assets, no such special exception
exists. Therefore, if a donor has unrealized gains on crypto assets, such unrealized
gains will be included in the taxable income when the donation is made, which
discourages the donation of crypto assets.
Thus, since tax reasons are inhibiting donation of crypto assets, it is necessary
to remove these obstacles and promote the effective use of crypto assets for
public benefit purposes.

B. Recommendations

It should be clarified by publicizing, through basic circular or tax answers, etc.,that when donations of crypto assets are made, they may be eligible for donation
deductions under the Income Tax Act if donated by individuals, and may be
deductible under the special deductible limit if donated by corporations.
Under the current Income Tax Act, when an individual donates crypto assets, themarket value of the crypto assets must be included in his or her income. However,a measure should be taken to exempt from taxation donations of crypto assets
by applying a measure to crypto assets similar to the special exception thatexempts from taxation the deemed capital gain income arising from donation inkind in Article 40 of the Act on Special Measures Concerning Taxation.

(6) Ensure opportunities for accounting audits of companies issuing crypto assets
A. Issue

The NFT White Paper recommends that accounting standards be clarified andthat certified public accountants and auditing firms be encouraged to actively
conduct accounting audits in response to the cases where companies are unable
to obtain audits from certified public accountants and auditing firms.
Although some major audit firms have recently been commissioned to perform
audits of web3 businesses, there are still concerns that companies related toweb3 that issue or own crypto assets are behind in their accounting and auditing
systems, and that they are unable to receive audits from CPAs and audit firms.
13This is a serious obstacle to the sound development of crypto assets and NFTrelated businesses in Japan, and by extension, to the sound development of web3.
Specifically, it has been reported that the existence of only partial accounting
standards for the issuance and holding of crypto assets and the lack of clarity
regarding the legal arrangements and rights and obligations related to the issuanceof crypto assets are factors that have prevented the commissioning of suchaudits.

B. RecommendationsFirst, regarding accounting treatment and accounting standards, in March 2018,
the Accounting Standards Board of Japan (ASBJ), the accounting standard setterin Japan, released the "Tentative Treatment of Accounting for Virtual Currencies
under the Funds Settlement Law." Subsequently, in March 2022, the ASBJ issued
the "Discussion Paper on Accounting for Issuance and Holding of ICO Tokens
that Fall under Crypto Assets under the Funds Settlement Law or Electronic
Records Transfer Right under the Financial Instruments and Exchange Law." It isnecessary to quickly develop accounting treatment, standards and guidelines
based on this paper. The ASBJ has also released a "Summary of Issues
Concerning Accounting for Issuance and Holding of ICO Tokens.” In this regard,
the ASBJ deliberated on the accounting treatment of crypto assets allocated toitself by the issuer of crypto assets at the time of issuance, and in its publishedsummary of the proceedings, clarified that certain crypto assets "are not valued
at fair value for accounting purposes until a transaction with a third party occurs."
The issue of crypto asset issuance is challenging, as there are few examples oftransactions, transaction practices have not necessarily been established, and it
is difficult to specify the nature of the obligations owed by the issuer. Therefore,
the relevant ministries and agencies should encourage the ASBJ to conduct
appropriate studies based on practical considerations in the industry.
Based on the Web3 White Paper and the recommendations of the Web3 White
Paper, in 2023, the "Study Group on Accounting Audit of Web 3.0 Related
Companies" was established at the Japanese Institute of Certified Public
Accountants (with FSA and METI participated as observers) to secure
opportunities for accounting audit of companies issuing crypto asset and others.
The Japan Institute of Certified Public Accountants (JICPA), the Japan Crypto
Asset Business Association (JCABA), and other organizations have developed
and published their own guidelines. In the future, the relevant ministries andagencies should support the efforts of the JICPA and others to ensure that theguidelines developed by the JICPA permeate practice.

(7) Further measures to promote the use of DAOs
A. IssueIn response to the recommendations made in the web3 white paper, as well as

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the "Proposal on DAO Rulemaking - New Organizational Structure in Japan" (seeAttachment 4) published by the web3PT in January 2024, the Financial Services
Agency revised the Office Ordinance on Definitions (Cabinet Office Ordinance on
Definitions as stipulated in Article 2 of the Financial Instruments and ExchangeAct). In addition, the Ministry of Justice clarified the interpretation of theregulations regarding limited liability companies ( Godo Kaisha) under theCompanies Act, allowing for the use of limited liability company ( Godo Kaisha)type DAOs (“GK-type DAOs”). In conjunction with this, the Japan DAO
Association, an industry organization for DAOs, was established with the partial
cooperation of web3PT working group members.
In order to promote the use of GK-type DAOs in the future, it will be necessary
to identify practical issues involved in establishing and operating a GK-type DAO,
and to consider measures to resolve these issues. For example, according to asurvey conducted by the Japan DAO Association, the following issues were raisedin preparation for the establishment of a GK-type DAO:・ Restrictions on the ability of non-executive members to, among other things,
solicit members of GK-type DAOs, could be an obstacle to the formationand expansion of DAOs.
・ In some cases, where web3, crypto assets, tokens, or other DAO-related
matters are listed in the business purpose of the articles of incorporation,
the examination for opening a bank account for a GK-type DAO may not beapproved.
Examples of the use of DAOs in Japan include local development, resolution ofsocial issues, and community management, and it is expected that DAOs will be
used for a wider range of purposes and scope (e.g., public benefit and non-profit
DAOs that do not aim to return profits to DAO members, as well as for-profit
DAOs that aim to return profits to DAO members), and there is great potentialfrom the perspective of revitalizing the Japanese economy and local communities.
In order to promote further utilization of such DAOs, it is desirable to be able toutilize legal forms other than limited liability companies ( Godo Kaisha) in
accordance with the purpose of the DAO, the attributes, number, and composition
of DAO members, and the operational form of the DAO, but to this end, there isa growing need to clarify the treatment of each legal form when applied to DAOs
as well as unclear accounting and tax-related treatment.
In addition, in order to promote the use of DAOs, it is necessary to ensureinteroperability with DAO legislation and practices related to DAOs in othercountries.

B. RecommendationsIn order to make GK-type DAOs easier to use, it is necessary to consider (i)reviewing the applicability of membership tokens as securities and the rules forsolicitation, etc. by members other than executive members, depending onwhether or not revenue is distributed to DAO members, as well as (ii) measures
to ensure the anonymity of DAO members (e.g., listing members by their

15









respective KYC-compliant wallet addresses instead of their names, etc.), while
paying attention to the possibility that they may be used in fraud cases. And, evenin cases where web3, crypto assets, tokens, and other matters related to DAOs
are listed in business purposes, there should be no obstacle to the opening ofbank accounts solely because of such business purposes. In addition, practicalissues in establishing and operating GK-type DAOs should be identified withreference to actual use cases in the future, and any points that can be addressed
through further clarification of interpretation or revision of practical operations
should be promptly addressed.
Any unclear treatments where existing legal forms other than limited liability
companies (e.g., NPOs, associations, and unincorporated associations) are applied
to DAOs as well as any practical issues upon establishment and operation of
DAOs utilizing such existing legal forms that can be addressed by clarifying
interpretations and reviewing practical operations (e.g., speeding up thecertification of articles of incorporation of NPOs and clarifying the criteria for
certification of NPOs as DAOs) should be promptly addressed.
In addition, based on research and studies of overseas legal systems (e.g.,
Switzerland, Marshall Islands, etc.) and DAOs operating globally, specificconsideration should be given to the possibility of creating a legal form specialized
for DAOs that is not bound by existing legal forms, and proactive measures toencourage overseas players to form DAOs in Japan or participate in DAOs formed
in Japan (e.g., fully online legal procedures, granting visas to DAO members using
national strategic special zones, etc.) should also be considered.
For each existing legal form applicable to DAOs, the accounting and tax treatment
of DAOs and DAO members (e.g., taxation when contributing crypto assets, etc.
upon DAO participation) should be clarified, and the possibility of tax incentives
for DAOs' business activities and donations to DAOs should be considered.
In addition to the above, the recommendations in the "Proposal on DAO
Rulemaking - New Organizational Structure in Japan" (see Attachment 4) willremain in this white paper.

(8) Digitalization of payment and investment instruments(8-1) Measures to promote circulation of permissionless stablecoins
A. IssueIn the "web3 Whitepaper" dated April 2023, the project team proposed that inorder to promote industries such as web3, digital asset trading, and the metaverse,
permissionless stablecoins, which will serve as a means of payment, should be
issued and distributed in Japan, and that various related businesses should becreated. In order to achieve this, it is important for the public and private sectors
to cooperate in creating an environment in which permissionless stablecoins can

16

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



be used safely and freely. 2
Subsequently, in June 2023, relevant laws and guidelines, factoring in the above
proposal, came into effect, which allows permissionless stablecoins to be issued
and traded in Japan under the law. Based on this, preparations are currently
underway for the issuance and distribution of permissionless stablecoins, mainlyin the form of specified trust beneficiary rights.
However, although 10 months have already passed since the enforcement of therevised law, no firms have succeeded in obtaining the necessary license and there
are no confirmed cases of actual issuance or distribution of stablecoins, and norelevant self-regulatory organization has yet been established, although there
have been efforts to establish one3. In addition, although fund remittance is oneof the core businesses of banks, and the issuance of stablecoins is deemed as a
type of fund transfer under the relevant laws and regulations, the issuance ofpermissionless stablecoins by the banks themselves is not allowed underadministrative practice.
In addition, there is demand for web3-related startups to accept investment bystablecoins, but it is difficult to accept such investments due to the uncertaintyof whether or not an inspector's investigation is required under the Companies
Act and the procedural and financial burden if such an investigation is required.

B. Recommendations


While the use of stablecoins is expanding overseas, there are still no examples ofstablecoin issuance or distribution in Japan, and no self-regulatory organization
has been established, despite the fact that about 10 months have passed since
the enforcement of the revised law. The authorities and the industry are urged totake the necessary steps toward the early issuance and distribution of stablecoins
and the establishment of a self-regulatory organization.
Regarding the issuance of yen-denominated stablecoins in the form of specified
trust beneficiary rights, all reserves must be managed in yen-denominateddemand deposits, which makes it difficult to continue the business as the shortterm yen interest rate is virtually zero. As such, there is a strong industry demand
for allowing JGBs as reserves. In this regard, it is desirable to consider the pros
and cons of allowing JGBs as a reserve, taking into account both the positive
aspects (improvement of business continuity (profitability) and safety as
underlying assets) and the negative aspects (price fluctuation and liquidity risk

2

Specifically, the report recommended the need to (1) improve the environment for prompt
license examinations by the authorities, (2) establish a self-regulatory organization in the industry
as soon as possible, and (3) study business models for the issuance and distribution of yendenominated stablecoins by domestic financial institutions and industry associations.
3
On April 1, 2024, the Japan Virtual and Crypto assets Exchange Association (JVCEA) publisheda draft of its self-regulatory rules and regulations regarding stablecoins and began soliciting publiccomments in preparation for applying to the Financial Services Agency for accreditation as a selfregulatory organization regarding stablecoins.
17

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

with respect to JGBs).
In addition, the relevant authorities, as a matter of practice, are not allowing banks
to issue permissionless stablecoins as a banking business while allowing moneytransmitters to do so. This is considered a kind of distorted state of affairs
because fund remittance is one of the core banking businesses. In addition to theneeds of banks to issue permissionless stablecoins, there are a wide range ofissues to be discussed, including the impact on the soundness of banks, thearrangement of the relationship with deposit insurance, and anti-money laundering
measures. It is therefore desirable for the authorities and the industry tocooperate in working out the issues to eliminate the distortions throughdiscussions in the banking industry and setting up opportunities for hearings at
the Financial Services Agency.
In addition, the Ministry of Justice should clarify the interpretation of theCompanies Act to the effect that, at the very least, when an investment to acompany is made with stablecoins which has been listed by a licensed electronic
payment instruments exchange services provider (i.e. licensed stablecoinexchange) via such provider, the payment constitutes a contribution in cash.

(8-2) Measures to promote the circulation of security tokens
A. Issue








In the "web3 White Paper" dated April 2023, the project team pointed out that inorder to develop the security token market, it is an important issue not only todevelop the primary market but also to develop the secondary market from theperspective of ensuring investors’ needs of selling security tokens for cash in atimely manner.
Subsequently, the Japan Securities Dealers Association and the Japan Security
Token Offering Association formulated self-regulatory rules for trading of unlisted
securities, including security tokens, on Proprietary Trading Systems (PTSs),
Based on this rule, in December 2023 trading of security tokens on a PTS (Osaka
Digital Exchange) began. As seen above, the development of the secondary
market is progressing.
In addition, a proposal to amend the FIEA has been submitted to the Diet to allow
a Type 1 Financial Instruments Business Operator (i.e. securities broker-dealers)
to operate PTSs without the additional approval by the regulator, on the condition
that any such PTS provides trading of only illiquid unlisted securities and the sizeof the transactions are limited.
In addition, in the "web3 White Paper" dated April 2023, the Project Team
recommended that tax treatment, including tax procedures, be considered for thedevelopment of the security token market. In the FY2024 Tax Reform Proposal,
interests on corporate bond security tokens that are managed, with certain
requirements, by financial instruments business operators, etc., will be subject tothe exemption from withholding tax on interest income received by financial
institutions, etc., and the tax exemption for public corporations, etc. and charitable
18

trusts, etc. However, other taxation issues for the development of the security
token market require continued consideration.
B. RecommendationsThe market for security tokens continues to expand, and it is expected that thediversification of underlying assets and the scale of transactions will continue toincrease. If the above amendment to the FIEA is enacted in the current Diet
session, two types of PTSs that handle security tokens will be created: licensed
PTSs and registered PTSs, depending on the size of transactions. It is important
for the authorities and the industry to make rules to ensure that secondary market
transactions are conducted under the discipline appropriate to each PTS fromthe perspective of ensuring fairness and transparency of the market, investor
protection, and the sound development of the security token market.
With regard to the taxation system, it is desirable for the relevant authorities to
conduct hearings, etc. with the industry on the appropriateness of security tokens(of which type is publicly offered trusts issuing specified beneficiary certificates)
for the NISA (Nippon Individual Savings Account), considering the fact that (i)there are already many examples of issuance of such security tokens, (ii) suchsecurity tokens have become easier financial products for general investors toinvest in because it is easier for them to understand risks, and (iii) they havebecome more tradable since they have started being traded on a PTS.
On the other hand, income from profit distributions and transfers of tokenizedrights of silent partnership contract is currently subject to comprehensive
taxation. It is desirable to consider the tax treatment of such products from theviewpoint of revitalizing the market, taking into account the characteristics ofeach product type, whether they are suitable for investment by general investors,
and their characteristics when compared to schemes such as trusts issuingbeneficiary certificates.

(9) Clarification of criteria for financial institutions' entry into web3 business andappropriate operations of regulations
A. IssueFor web3 services to be widely accepted as reliable and safe services, it isdesirable for interested banking and insurance groups to be involved in businesses
related to web3 services. The momentum for entry into the web3 business byfinancial institutions has increased and opportunities for consultation withregulators have also increased since the publication of the web3 White Paper in
April 2023.
However, when a banking group or an insurance group tries to enter the web3
business in relation to its banking or insurance business, the question is whether
it is included in the incidental business under the law, and if not, whether it canobtain approval as an advanced banking service company as non-banking or19

advanced insurance service company as non-insurance. In practice, however, it
is not always clear whether or not a company falls under the category of incidental
business, and it is not clear to what extent the abstract and qualitativerequirements4 must be explained to the authorities during the examination for
approval as an advanced service company.
B. RecommendationsFor banking and insurance groups attempting to enter the web3 business, theauthorities should provide support for efficient preparation of applications throughprior consultation, and should improve the efficiency of consultation services withthe authorities in order to speed up the approval process.
In addition, from the viewpoint of improving transparency, the interpretation ofincidental business and criteria for approval review should be continuously
developed and published in a timely manner by the authorities in accordance withthe accumulation of future cases of web3 service-related businesses.

(10) NFT Business(10-1) Revitalization of NFT utilization in the content industry in Japan
A. IssueAlthough there have been no cases in which the crime of gambling has been
established for the service that combines random NFT sales and secondary
distribution market (hereinafter referred to as "NBA Top Shot"), which hasdeveloped rapidly in Europe and the United States, there have been some voices
expressing concern. Based on the recommendations in the NFT White Paper
published by this project team in 2022, the Council for Sports Ecosystem
Promotion formulated and published guidelines on September 20, 2022, following
consultations with relevant ministries, agencies, and sports organizations ("NBATop Shot Type Guidelines").
On the other hand, although there have been no cases filed in Japan regarding
the development of fantasy sports 5 services utilizing NFTs, which have been

4

For example, in the case of banking, it is required to satisfy requirements such as "the advanced
banking service company subject to the authorization is capable of conducting its business properly
and fairly," "no serious risk that may affect the sound and appropriate management of the servicesof the applicant bank," and " no serious risk that the interests of customers of the services carriedout by the applicant bank or by the advanced banking service company subject to the relevant
authorization will be unduly harmed" (Bank Act Enforcement Regulations, Article 17-5-2, Paragraph2, Items 5, 7, and 9).
5
In this game, users create a fictitious team composed of real players and compete against otherusers based on the actual game performance of those players. Recently, a service has become
popular in Europe and the United States where digital cards featuring athletes’ portraits areconverted into NFTs. Users can purchase these NFTs using crypto assets. In this service, the NFTs
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

expanding in Europe and the U.S. in recent years, some point out that dependingon the manner, it may fall under the crimes of gambling and running a gambling
place for the purpose of gain. Therefore, sports organizations and businesses arestill cautious about providing the same type of service.
In addition, in content industries other than sports, such as art, games, movies,
cartoons, animation, and music, there may be concerns about the applicability of
the crime of gambling and running a gambling place for the purpose of gain tobusinesses using NFTs, as well as NBA Top Shot-type services. In the content
industry as a whole, including sports, there is a need for a unified industry
association covering the web3 domains, and a challenge is how to disseminate theguidelines formulated by this association in cooperation with the public and private
sectors.
In March 2023, the FSA partially revised its administrative guidelines regarding
the applicability of NFTs as crypto assets. The FSA's interpretation that theissuance of NFTs with a unit price of 1,000 yen or more or with an issuancenumber of 1 million or less is not considered a crypto asset was presented6, which
has expanded the potential for NFTs to be utilized. On the other hand, while there
is a plan to issue various tokens including NFTs to fans in the production ofcontents such as movies to grant them various rights and interests related to the
production of the contents, there are still various legal issues to be resolved inorder to realize the issuance of such tokens.

B. Recommendations

In light of the fact that similar business models for fantasy sports services using
NFTs are already rapidly developing in Europe and the U.S., the public and private
sectors should work together to determine whether these services fall under thecrime of gambling or running a gambling place for the purpose of gain, and toestablish guidelines that indicate which forms of business can be legally operated.
The guidelines should provide sports organizations and operators with legal ways
to return profits when domestic organizations license the use of athletes'
likenesses and data to overseas operators.
For profitable business models utilizing NFTs in the content industries other thansports, where there are high legal hurdles to realization in Japan, measures should
be considered in cooperation between the public and private sectors to provide
active support and realization of such models. These models should promote thecontent industry and serve the public interest, for example, by making it acondition to return profits to content holders and utilize profits for public interest
activities.
On the other hand, looking overseas, as the NFT business develops in othercountries, there is a concern that there will be an increase in the number of cases

acquired by the user grant them the right to participate in fantasy sports tournaments free ofcharge. Cash prizes are awarded to the participants who achieve outstanding results.
6
Response to FSA Public Comment dated March 24, 2023.
21

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

in which overseas NFT operators make profits by utilizing, without permission,
content and data that are strong assets in Japan, such as sports, games, movies,
cartoons, animation, and music. To ensure appropriate profit sharing, the relevant
ministries and industry associations should work together to organize the rightsof data and NFTs, and then consider how to realize profit sharing by legallylicensing the content holders to the concerned NFT businesses.
To solve the above issues, the government should actively support the formationof a unified industry association covering the web3 domains in the content
industry, and the industry association and the government should work together
to consider measures such as the formulation of guidelines. If guidelines are
established, the government should disseminate them to the industry andencourage business operators to use and comply with them. The NBA Top Shottype guideline has been disseminated through the Ministry of Economy, Trade andIndustry (METI) website, but the public and private sectors need to work together
to further disseminate information on whether the NBA Top Shot-type isconsidered illegal gambling.
It is important for the FSA to continue its efforts to respond to legal inquiries
from businesses that are concerned about the applicability of crypto assets andother legal and regulatory issues. In addition, as there is a plan to issue various
tokens including NFTs, to fans in the production of contents such as movies andto grant various rights and interests related to such contents production, it isdesirable for the FSA to continue to recognize the usage issues of various tokens,
including NFTs, and consider how to address these issues.

(10-2) Return of revenue from secondary distribution market
A. IssueIn the 2022 NFT White Paper, we recommended that the service that combines
random sales of NFT and the secondary distribution market, which has developed
rapidly in Europe and the U.S., should be improved with rules to appropriately
return revenue from secondary distribution of NFTs that use the likenesses ofathletes, actors, artists, and other performers to those athletes and performers.
Based on these recommendations, on September 20 of the same year, the Council
for Sports Ecosystem Promotion formulated and published guidelines following
discussions with related ministries, agencies, and sports organizations.
In the Guidelines, it is confirmed that there is an aspect of using the publicity
rights of players when NFT transactions are conducted between users in thesecondary distribution market, and (a) when the business entity issuing the NFT
receives a part of the transaction amount in the secondary distribution market,
the necessity of payment of the license fee to the sports organizations andplayers shall be determined through consultation and negotiation. (b) The party towhom the license fee is to be paid for the primary or secondary distribution market(whether it is to be paid directly to the athlete or through a sports organization),and the payment destination of license fees in the event that a player retires or22transfers, etc., shall be determined on an individual basis according to industry
practice, internal rules and the content of the contract with the relevant entity
for each sport.
However, the lack of standard revenue return rules for each sports organization,
especially when players transfer teams or retire, has been a stumbling block, andthe utilization of the secondary distribution market itself for services that convert
players' portraits, etc. into NFTs has been hampered.

B. Recommendations
With regard to the return of revenue to players, it is necessary to continue working
together with related organizations, relevant ministries and agencies, and industry
associations to urgently develop rules, including the formulation of appropriate
revenue return models. In this regard, since the industry practices and internal
rules differ among sports organizations, it would be beneficial for the public andprivate sectors to work together and engage in dialogue with each sports
organization to develop a model for profit sharing.
In the future, in the utilization of the secondary distribution market for services
in which a performer's portrait is converted into NFT, a similar issue may arise
regarding the legal arrangement concerning the necessity of profit return to theperformer. In addition, in the case of secondary distribution of NFT, such as amovie clip, if the one-chance principle in motion picture works is applied, although
the performer cannot exercise his/her rights under neighboring rights withrespect to the secondary distribution of such an NFT, the question of whether
the performer can exercise his/her rights under his/her right of publicity may also
be an issue. Since practitioners may have different interpretations on this point,
the views of the relevant ministries should be presented.

(11) License appropriate for web3 business
A. IssueIn the "web3 Whitepaper" dated April 2023, the Project Team stated that web3
services are expanding and diversifying, and that there are an increasing numberof business models where it is not necessarily clear whether services related to
crypto assets fall under the category of crypto asset exchange business. With
this background, the web3 Whitepaper proposed that The FSA needs to (i)provide in its administrative guidelines, etc., points of consideration for
determining applicability of crypto asset exchange business to businesses using
crypto assets, and (ii) if the issue of uncertainty cannot be solved through theoperation of regulations alone, consider necessary measures such as creation offlexible structure of regulations, including the creation of new regulated businesstypes, to appropriately respond to the diversification of crypto asset related
businesses.
Around the same time, major telecommunications carriers, mobile gaming

23

companies, flea market app companies, and other companies have indicated theirintention to enter the web3 business. These companies have a very large numberof users and will be key players in the development of web3 in Japan.
These companies are planning to promote their businesses by partnering withexisting regulated companies rather than obtaining licenses of crypto asset
exchange services or electronic payment instruments exchange services, buteven in that case, it is difficult to provide a highly user-friendly UI/UX because
connecting users with such regulated companies may fall under the category ofcrypto asset exchange services.

B. Recommendations
The FSA is currently considering presenting points of consideration for
determining applicability of crypto asset exchange business to businesses using
crypto assets after listening to the opinions of the industry. It is important for the
FSA to promptly publish revised guidelines including such points of consideration
in a clarifying manner.
In the traditional financial industry, there is a regime of licenses such as Bank
Agency Services, Financial Instruments Intermediary Services, and Financial
Services intermediaries, which allow non-financial businesses to act only asagents or intermediaries between users and banks, securities companies, andinsurance companies. These business licenses are used to provide embedded
finance to users, allowing more citizens to conveniently access financial services.
Although similar system does not currently exist in the crypto asset exchange
business or the electronic payment instruments business, it is exactly what isneeded for the above-mentioned business companies, etc. to make a full-scale
entry into the web3. In addition, the intermediary or agency system has alreadybeen introduced in the traditional financial industry, and the authorities haveaccumulated knowledge on how the system should work and how to actually
supervise it. Therefore, the authorities and the industry should work together to
identify the needs of such intermediary system with regard to crypto assets andelectronic payment instruments in detail as early as possible, and then consider
measures such as the creation of an intermediary business.

24

3. Issues that should be further explored for the further development of web3
(1) Support for overseas expansion of Japan's content industry using web3
A. Issue








The content industry, which includes art, sports, games, movies, broadcasting,animation, manga, and music, is an industry of great strength for Japan, with
abundant and high-quality intellectual property that is internationally competitive.
If these fans and users can be incorporated into the web3 ecosystem, Japan's
content industry has great potential to create new markets overseas by revaluing
content to a globally appropriate price using web3 as a gateway.
However, content holders and creators face high hurdles in recognizing andunderstanding how to use NFTs, legal risks, and how to select web3-relatedcompanies as partners who can safely and securely develop overseas business.
This is a major stumbling block to the overseas expansion of Japan's content
industry using web3.
Various efforts are being made by relevant ministries and agencies to support theoverseas development of Japanese content. For example, the Ministry of
Economy, Trade and Industry (METI) is supporting the creation of use cases in
the content field by encouraging the use of the subsidy for the project to promote
overseas development of content and strengthen infrastructure (JLOX subsidy),
which was provided in the second supplementary budget for FY2022. The Ministryof Internal Affairs and Communications provides support for program production
and participation in trade fairs, while the Agency for Cultural Affairs offers
subsidies to support the participation and exhibition of Japanese galleries atoverseas art fairs and other events. In addition, the Intellectual Property Strategic
Headquarters of the Cabinet Office announced its "Intellectual Property Strategic
Plan 2023," which outlines the direction of measures to support "content creationin response to next-generation business environments such as Web 3.0 and theMetaverse," in cooperation with related ministries and agencies. However, thegovernment as a whole has not yet established a system to promote support foroverseas development of web3 content, and there is still a lack of clear contact
points and insufficient coordination among the relevant ministries and agencies
with jurisdiction.
In addition, while there are rampant cases overseas where NFTs are issued andsold without permission by parties other than content holders, content holders
cannot safely and securely utilize web3 if the arrangement of rights when theirown content or data that is the main source of their content is converted to NFT
is unclear.

B. Recommendations
After clarifying which ministries and agencies will serve as the command post, itis necessary to establish a consultation service for content holders and creators25

who are interested in overseas development using web3. In addition, as a measure
to specifically support overseas development, the relevant ministries andagencies should partner with reliable overseas web3-related companies and study
the use of overseas tax incentives collectively in the public and private sectors.
Particularly in the film business, where DAOs are expected to be utilized incontent production, the possibility of global utilization of DAOs by production
committees should be promptly sorted out and examined, and measures to realize
this should be considered in cooperation between the public and private sectors.

(2) Safe and Secure Use Environment
A. Issue








General consumers are participating in the web3 ecosystem, and the web3
economy is expanding significantly toward mass adoption. In addition, blockchain
technology has the potential to go beyond the web3 ecosystem to become afundamental technology in the near future, as a world that balances economic
development and the resolution of social issues is realized in a system that highly
integrates cyberspace and physical space.
On the other hand, for ordinary businesses and consumers who do not haveparticularly high IT literacy, there are high psychological hurdles to participatingin the web3 ecosystem, which empasizes the principle of self-responsibility, andto investing a large amount of assets. In the borderless web3 ecosystem, where
there is no central authority, it is said to be more difficult to recover from hacking
and fraud than with traditional assets. In fact, there have been some cases ofmoney being transferred to the accounts of financial institutions of crypto asset
exchangers in Internet banking frauds and special frauds, which are believed tobe caused by phishing.
As web3 grows from a small ecosystem of early adopters to a large ecosystem ofgeneral consumers, it is necessary to consider not only asking participants to takeresponsibility for their own actions, but also providing a safe and secureenvironment for use based on literacy.
In particular, the development of highly secure chains and the provision of wallets
that allow users who are not necessarily highly literate to securely store andtransact property are important for the expansion of the web3 ecosystem.

B. RecommendationsIn the Web3.0 Research Society Report published by the Digital Agency, theimportance of providing information and awareness to users and responding tocross-border crimes was presented as a basic direction for the healthy
development of web3 ecosystem, based on the recognition that user protection
is an urgent issue. Based on this policy, we understand that a survey on consumer
protection among web3 users has been conducted, and the results of the survey
should be promptly analyzed and linked to concrete measures.

26





In providing information and education to consumers, it is important to implement
measures that contribute to the development of a safe and secure use
environment from the consumer's perspective, so as not to fall into so-called"stove-piped administration" or end up providing information in a one-way
manner. We understand that the National Police Agency, in cooperation with the
Financial Services Agency, has requested financial institutions to strengthen
measures against unauthorized remittances to crypto asset exchangers. The
National Police Agency should continue to promote efforts to realize a safe andsecure web3 use environment by, for example, promoting the control of cybercrimes and the clarification of the actual situation in cooperation with foreign
investigative agencies.
At the same time, the government should closely monitor the development ofwallets that are safer and easier for ordinary consumers to use as part of its userprotection measures, and provide support as necessary.

(3) Utilization of web3 in revitalizing local communities
A. Issue








The number of web3 projects is increasing in local development as well. The
characteristics of web3, where communities are formed in digital space andparticipating members contribute to the activation of projects, are a good matchfor local development. As cyberspace and physical space continue to merge anddiverse members participate in projects, the importance of blockchain technology,
in which participants voluntarily provide part of their personal information forauthentication, is expected to increase further.
On the other hand, there are many challenges for local governments to promote
web3 projects and link the fruits of these projects to local development andimproved convenience for residents. For example, many local governments havea strong interest in web3 and are accumulating knowledge, but it is not easy tokeep updating the knowledge and know-how of local government officials in a
rapidly changing field. In addition, the situation where each local government ismaking efforts to acquire knowledge individually is inefficient from the perspectiveof the whole country.
Another challenge is that laws, regulations, and systems related to local
governments do not anticipate the promotion of web3 projects by local
governments. For example, there is no government policy on whether local
governments can hold crypto assets or NFTs, and if so, how they should accountfor them. Under these circumstances, many local governments are reluctant topromote web3.
In Japan's regions, there are countless resources that foreigners find highly
valuable, such as food, traditions, culture, nature, and sightseeing experiences,
but in many cases, these resources are not sufficiently available to earn foreign
currency at a high profit margin by offering them at a reasonable price built up
from cost. By converting these resources to NFT and distributing them on a global
27

platform, they will be able to earn profits at international level prices. By forming
an ecosystem in which the profits are further reinvested, it is expected that local
regions will be revitalized.
B. RecommendationsIn October 2022, a "Web 3.0 Information Sharing Platform" was established onthe "Digital Reform Co-Creation Platform" as a dialogue between local
governments and relevant ministries and agencies, and we understand that it isbeing used to a certain extent to answer questions from local governments. On
the other hand, it is not fully recognized that the platform functions as aconsultation desk to the government. Local governments are expected to actively
consult with the Digital Agency and other relevant ministries and agencies throughthe platform from the conceptual stage of web3 projects.
It is expected that the Digital Agency and related ministries and agencies will
promote the use of the platform and work together with local governments thathave inquired about it to create examples of local development using web3,
thereby revitalizing the platform. In addition, with regard to issues that local
governments are sure to face in promoting web3 projects, such as how accounting
procedures should be handled when local governments hold crypto assets, therelevant ministries and agencies should use the platform to collect information,
identify issues at an early stage, and work closely with the relevant ministries andagencies to discuss measures to resolve them. The relevant ministries andagencies should work closely with each other to consider measures to resolve
the issues.
We promote initiatives to tokenize high-value local resources and distribute themon global platforms to generate revenue at international market prices. The
government should examine mechanisms to ensure that a large number of NFTs
are exhibited on the platform and that these transactions are actively conducted,
and should provide support as necessary.

(4) Further promotion of measures against money laundering and terrorist financing incooperation with the international community
A. Issue

Crypto assets are often cited as having a high risk of being used for money
laundering and terrorist financing due to their anonymity, and this risk is only
increasing with the further development of anonymization technology. According
to a U.S. blockchain analysis company (Chainalysis), the largest-ever money
laundering case using crypto assets (amounting to approximately 2.5 trillion yen)
was reported in 2022.
The prevention of money laundering and terrorist financing through crypto assets
cannot be achieved by the efforts of a single country alone; it requires
international consensus and cooperation. The FATF revised the FATF standards28in June 2019, requiring countries and regions to introduce the so-called travel
rule. This rule mandates that crypto asset exchangers obtain information on thesource and destination of crypto assets when transferring them, and notify thecrypto asset exchanger used by the transferee. In Japan, the Japan Crypto Asset
Traders Association (JVCEA) implemented the travel rule in April 2022 throughself-regulatory rules. Additionally, in June and December 2022, the government
amended the Act on Prevention of Transfer of Criminal Proceeds. to introduce
the travel rule for crypto asset exchangers and electronic payment methods, that
trade or exchange stablecoins. The government has taken necessary measures
such as introducing travel rules for crypto asset exchangers and electronic meansof payment traders who buy, sell, or exchange stable coins. In addition, thegovernment is currently participating in meetings on technical issues held byprivate organizations such as BGIN (a multi-stakeholder international conference
to discuss blockchain governance) to discuss blockchain governance, including
money laundering and terrorist financing.
However, despite these international efforts, it is impossible to completely preventmoney laundering and terrorist financing with crypto assets. New methods to"safely" launder money and finance terrorism continue to emerge, such as using
mixing services to obscure the origins of funds and utilizing unregistered crypto
asset exchangers that do not verify user identity.

B. RecommendationsThe government should continue to understand and analyze the risk of crypto
assets being used for money laundering and terrorist financing, and consider
establishing a framework such as an expert panel for this purpose.
On that basis, the issues of money laundering and terrorist financing should
continue to be discussed and examined in international forums, particularly the
FATF. Japan should also take a leading role in international discussions to develop
a sound crypto asset economic zone, based on these considerations.
Of course, it should be noted that mere tightening of regulations may lead to a
reduction in legitimate transactions and impede the sound development of thecrypto asset economic sphere. Measures need to be considered based on
discussions at expert meetings and with stakeholders in the crypto asset sphere.
In this regard, the government is currently participating in meetings on technicalissues at the BGIN and other private organizations, and it is necessary to continue
discussions with a variety of stakeholders.

(5) Crypto asset business(5-1) Crypto asset derivatives leverage ratio
A. IssueWith the 2019 amendment to the FIEA (effective 2020), derivative transactions

29with crypto assets or their indices as underlying assets (crypto asset derivativetransactions) became a regulated transaction under the Act. In light of the highvolatility and similar regulations in foreign countries, the maximum leverage ratio
for crypto asset derivatives transaction is set at 2x for individual users, and forcorporations, the Japan Virtual and Crypto assets Exchange Association (JVCEA),
a self-regulatory organization, sets the maximum leverage ratio based on volatility,
liquidity, and other factors.
The maximum leverage ratio of 2x for individual users is considered appropriate
from the viewpoint of user protection, in light of the high volatility of crypto assets.
On the other hand, according to the JVCEA and other industry associations, there
are many unregulated crypto asset derivatives firms overseas that allow muchhigher leverage multiples than those in Japan, and many Japanese retail users
prefer to trade crypto asset derivatives with such unregulated overseas firms
rather than Japanese crypto asset derivatives firms. This is not conducive to userprotection, and the leverage ratio in Japan needs to be increased.

B. RecommendationsThe authorities should investigate and review, in cooperation with the industry
and experts, the appropriateness of the current leverage ratio cap for crypto
asset derivatives transactions, including the existence and extent of negative
effects (such as outflow of funds to unregulated overseas firms) described by the
JVCEA and others, the possibility of eliminating such negative effects by raising
the leverage ratio cap, and the degree of transaction risk arising from raising theleverage ratio cap. The regulatory frameworks for crypto asset derivatives
transactions in foreign countries (especially major countries) may also be
considered as a reference.
If the JVCEA and other industry associations believe that the leverage ratio
should be increased, they should demonstrate with sufficient evidence that theincrease in risk that would result from this is not a problem from the standpointof user protection.

(5-2) Trends in Crypto Asset Cash ETFs
A. IssueIn the United States, 11 Bitcoin ETFs were approved by the Securities andExchange Commission on January 10, 2024 and are currently listed on several
stock exchanges. The providers of these ETFs include some of the world's mostprominent asset managers such as iShares, Fidelity, and Invesco. Trading has
grown steadily since listing began, and according to Bloomberg, total net assets
reached $52.5 billion (approximately 7.875 trillion yen) as of March 22. In addition,
outside the U.S., Bitcoin ETFs have already been listed in Canada and Germany.
On the other hand, in Japan, crypto assets are not included in the specified assets
to be invested in investment trusts under the Act on Investment Trusts and

30





Investment Corporations( Investment Trusts Act), and the creation and sale ofinvestment trusts for non-specified assets is restricted under the relevantsupervisory guidelines. Therefore, investment trusts (including Exchange Traded
Funds (ETFs)) that invest in crypto assets do not exist.
Since ETFs are structured as products that can be widely invested in by thegeneral public, the inflow of funds into crypto asset ETFs will be strong as
described above, and this may lead to further concentration of physical crypto
asset trading in the US.
In light of this situation, the question arises whether it is really appropriatemonetary policy not to allow investment trust, including ETFs, that invest in
crypto assets in Japan.

B. Recommendations








Taking into consideration the current approval and trading of Bitcoin ETFs in the
U.S. and some other major countries, the authorities are requested to consider
the appropriateness and pros and cons of making Bitcoin and other crypto assets
investable assets for investment trusts (including ETFs) in Japan (in other words,
whether they can be said to be assets that need to be made easy to invest in) inlight of the objectives of the Investment Trusts Act, 2 and the issues mentioned
above. In doing so, it is desirable to take into consideration the possibility that
not only individual investors but also institutional investors' assets undermanagement may flow out to the U.S., etc., where Bitcoin ETFs already exist.
Related entities for structuring and selling crypto asset ETFs are not only of
crypto asset exchanges, but also securities broker-dealers, asset managers, andtrust banks. Therefore, if it is desired to structure and sell crypto asset ETFs inJapan, it is desirable for related industries to work together to sort out andanalyze issues, consider necessary efforts to foster public understanding of
crypto assets as assets that should be easy to invest in, and makerecommendations for necessary legal amendments, etc.
In addition, since there are various crypto assets, it may not always be possible
to draw appropriate conclusions by examining crypto assets as a whole in theexamination of the necessity and appropriateness of the above in the authorities
and the industry, it may be better to select specific crypto assets to be examined.
In such a case, however, it would be necessary to consider the rationale forselecting such crypto assets.
Furthermore, in the UK, the London Stock Exchange has announced that it will
be listing Bitcoin and Ether ETNs (exchange-traded notes) for professional
investors. As such, it is advisable to consider the pros and cons of structuring
and selling investment trusts or similar products for professional investors(whether listed or unlisted).

31

Attachment 1

Review and Progress of measures Covered in the web3 White Paper 2023
(Unpublished text only)
Theme

Overview of the web3 White
Progress of Measures byPaper 2023 Recommendations Relevant Ministries and Agencies
2. Issues to be addressed immediately for promoting web3
Tax reform Measures to exempt tokens
 In the 2024 tax reform, anheld by third parties that are
exemption from year-end
not for short-term trading
mark-to-market taxation was
purposes from year-end
provided for crypto assets
mark-to-market valuation
continuously held by third
parties other than the issuer.
Screening, Streamlining of token
 In June 2023, the Financial
issuance andexamination by JVCEA andServices Agency (FSA) decided
distribution of
the FSA by making
that, in principle, the eligibility,
various tokens
examination items specificfeasibility, etc. of ICO/IEO
and visible
eligible businesses shall be
subject to examination by the
JVCEA.
 JVCEA is studying andpreparing for the specifics of
examination items for
ICOs/IEOs, which are notsubject to the CASC system,
and for the external publicationof examination results(supplementary conditions andadditional remarks).
 With regard to the status of
JVCEA's examination of
cryptoassets, (1) the number ofcases awaiting examination
decreased from 86 in October
2021 to 14, (2) the cumulative
number of cases using the
CASC system is 82, and (3) the
number of cryptoassets
examined has increased from45 in October 2021 to 111 (allas of March 5, 2024).

32

ThemeOverview of the web3 White
Paper 2023 Recommendations
Countermeasures  Support from relevant
againstministries and public funds tounlicensed NFT
achieve a steady takedown
and consumer
activity of unlicensed NFTs
protection

Progress of Measures byRelevant Ministries and Agencies
 Following on from the FY2022
survey, the Ministry of
Economy, Trade and Industry(METI) conducted a verification
test of the takedown of
unlicensed NFTs for major
overseas platforms in FY2023.
The survey revealed that IPs
used in unlicensed NFTs can bewithdrawn from the market byclarifying the location of therights to the IPs and requesting
their removal.
 The private sector is beginningto take action for takedown,
and the (METI will support such
efforts.
 The Consumer Affairs Agency
is conducting a survey on
consumer protection among
web3 users (especially general
consumers).

3. Issues that should be further explored for the further development of web3
Private law
 Examination of the legal
 Two civil and commercial law
treatment of
nature of digital assets
scholars were hired as special
digital assets(valuation of property rights)
researchers at the FSA's
and organization of opposition
Financial Research Center
requirements, etc.
(December 2023), and are
currently researching overseas
initiatives. The Ministry ofJustice will follow up on the
progress and content of the
FSA's research andinternational efforts, andprovide necessary cooperation.
ML/TF
 Prevention of money
 We should deepen discussions
prevention
laundering, etc., through theto understand and analyze
misuse of blockchain,
ML/FT risks due to crypto
including unhosted wallets
assets, including considering
the use of frameworks such as

33

ThemeOverview of the web3 White
Paper 2023 Recommendations
 Prevention of terrorism andorganized crime targeting
assets on the blockchain

Metaverse
utilization

 Consideration of formulating
guidelines for employment
support using the metaverse
 Started discussions in the
public and private sectors on
support for job creation,technological development,
overseas expansion, etc.

34

Progress of Measures byRelevant Ministries and Agencies
the Expert Panel, and leadinternational discussions forthe development of a healthy
crypto asset economic zone
and progress in ML/FT
prevention measures.
 In the draft budget for FY2024,
the Ministry of Health, Laborand Welfare added virtual
offices (including themetaverse) to the subsidies forsupporting the securing of
human resources (telework
course). In addition, a budget
was allocated to conducthearings and surveys on AI andthe state of labor managementin virtual spaces.
 As part of its public relations
efforts, the Osaka Labor
Bureau set up a space on the
metaverse where visitors canpre-experience employment
assistance in order to uncoverpotential users. Starting in
February 2024, the program
was implemented to raiseawareness of employment andeventually lead to visits to thereal "Wakamono Hello Work.”
 Some municipalities are using
the metaverse space(Minecraft) as a place todeepen interactions among
persons involved in support forsocial withdrawal.

Attachment 2

Review and Progress of measures Covered in the NFT White Paper
Theme
Establish asystem forformulating
andpromotingnational
strategies

Developand secureengineers
skilled in
BC skills

Overview of NFT White Paper
Progress of Measures by Relevant
Recommendations
Ministries and Agencies
 web3 and NFT should be The Digital Agency has set up a
positioned as a pillar of new"consultation desk" for local
capitalist growth, and a minister
governments and businesses, andin charge of web3 should be
has also developed a system forappointed to promote economic
responding to the consultation
policies and serve as a commanddesk. Under this system, not only
post for cooperation with other
do we receive consultations, butcountries. A cross-ministry
we also collect information on
consultation office should bedomestic initiatives, contact
established.
businesses that are implementing
such initiatives, and listen to theirissues and problems.
 However, the range of businesses
is broad, and it is necessary toconsider the selection of contacts
and how to separate the roles ofprivate businesses, such as law
firms, from those of the private
sector.
 In the short term, an attractive The Ministry of Economy, Tradedevelopment environment andand Industry (METI) and thetax system for entrepreneurs
Ministry of Justice (MOJ) haveand engineers should be realized.
taken the lead in expanding theIn addition, measures should bestart-up visa system to allow
implemented to encourage theprivate businesses as well as local
inflow of foreign humangovernments accredited by METI
resources, such as the issuanceto issue a letter of confirmation inof special visas (crypto-VISA)
order to facilitate the activities offor personnel with a certain level
entrepreneurs in Japan who areof knowledge and skills in
active in the web3 and othercrypto-asset related businesses.
global fields.
 In the long term, efforts should To further advance and diversify
be made to develop and secure
web3 business, consider
human resources for advanced
supporting the development ofdigital-related technologies.
human resources in related fields,
including blockchain, and thecreation of communities that35

ThemeOverview of NFT White Paper
Recommendations

Designprotectionin thedigitalspace While sorting out the limitationsof measures by copyright, theUnfair Competition Prevention
Act, etc., the possibility ofallowance by amending design
right should be considered in the
future.

36

Progress of Measures by Relevant
Ministries and Agencies
contribute to technologicaldevelopment.
 The Digital Agency, METI, theFinancial Services Agency, andothers are already planning to cosponsor, support, and dispatch
speakers to several international
web3 related events this year toencourage overseas BC personnel
to visit Japan and support
networking.
 The 2023 amendment to the
Unfair Competition Prevention Act
expanded the scope of protection
for acts of product form imitation(Article 2, Paragraph 1, Item 3 of
the Act), one of the types of
unfair competition under the Act,and came into effect on April 1,
2024. This will deter imitations ofactual products in the digitalspace, and is expected to advancethe protection of rights in productdesign, including clothing.
 "The Public-Private Partnership
Conference on Dealing with New
Legal Issues Concerning Content
in the Metaverse, etc.,"
established by the Cabinet Office,organized and published its views
concerning the handling of rights
related to "IP use that intersects
real space and virtual space,design of virtual objects, etc." on
May 23, 2023. In addition, theConference also publishedreorganized documents for (i)metaverse platformers andplatform users, and (ii) metaverse
users and content right holders
regarding the legal ideas, points tokeep in mind, and effective

ThemeOverview of NFT White Paper
Recommendations

 The rights to be acquired by
NFT holders through theissuance and distribution of
NFTs should be organized andmade known to content holders.
In addition, model clauses oflicense agreements and points
to keep in mind for each clauseshould be presented to promote
understanding.
Secure The current response should becontent
to explain the existence of suchdata notrisks to consumers, and to
stored on
encourage industrial
theorganizations to establish rules
blockchain
for explanations by guidelines,etc.
 In addition, relevant ministries
and agencies should take acertain amount of initiative inresearching the possibility ofutilizing data storage that does
not depend on a specific entity,
such as the mechanism of
distributed storage (e.g. IPFS,
the InterPlanetary File System).
Prevention  In light of the risk of moneyof moneylaundering/terrorist financing
laundering(ML/TF) using NFT, necessary
using NFTs
and effective ML/TF prevention
andshould be considered fromrestrictions
multiple angles in cooperationonwith the public and privatetransfers tosectors, while also taking into
Measuresnecessary
to protect
the rights
of content
holders

7

Progress of Measures by Relevant
Ministries and Agencies
measures to deal with the issues
on February 13, 2024.
 As part of its efforts to promote
and raise awareness of copyright,
the Agency for Cultural Affairs
disseminates information on therelationship between copyright and
NFTs related to content and points
to keep in mind when using NFTs
at copyright seminars7 andcopyright educational materials .8
 The relevant ministries andagencies should continue toeducate consumers.
 While taking into account thelatest actual conditions, therelevant ministries and agencies
should continue to study thepossibility of utilizing data storage
that does not depend on a specificbusiness entity.

 Since money laundering using
NFTs and the transfer of assets
to countries subject to economic
sanctions are not frequent inJapan, and since there has notbeen much discussion ininternational organizations such as
the FATF, the necessity of

On February 24, 2023, an online copyright seminar (2022 Copyright Seminar) was held for a wide
audience including those unfamiliar with copyright, and on December 22, 2022, the 10th lecture of
the University of Electro-Communications Endowed Lecture Series "Entertainment Business and
Copyright in the AI Age" was held.
8
On the Agency for Cultural Affairs website, "copyright texts" and copyright Q&A to answer
various questions about copyrights, etc. are available.
37

Themecountries
subject toeconomic
sanctions,etc.

Overview of NFT White Paper
Recommendations
consideration the balance with
innovation promotion.
 The public and private sectors
should work together to informthe public that certain NFT
transactions may be subject to
the Foreign Exchange andForeign Trade Law's licensing
requirements and should beconsidered from multiple
perspectives through publicprivate consultations andinternational cooperation.

38

Progress of Measures by Relevant
Ministries and Agencies
regulation and how it should bedone in Japan are issues forfurther study.
 We plan to continue to study thisissue from various perspectives
through public-private
consultations and international
cooperation, taking into accountthe status of responses byinternational organizations andcountries to the risks of money
laundering and asset transfers tocountries subject to economic
sanctions with respect to digitalassets, including NFTs.

Attachment 3

web3PT Interview Schedule
Date

Theme

Interviewee

Year 2023
Tuesday,

Recent Trends in Crypto
AssetsFinancial Services Agency
Japan Crypto Asset Traders Association

June 6

Regulatory Compliance
Status of Crypto Asset
Exchangers

June 7(Wed.)The latest case study on the a42 corporation
use of blockchain technology JPX Research Institute(NFT/ST)" Wallet
dissemination initiative using
my number
Green Digital Truck Bond
Initiatives

June 14(Wed.)The Role of Cryptography
and Zero-Knowledge Proofs
in Digital Governance
About CBDC (Central Bank

Aya Miyaguchi, Executive Director, EthereumFoundation
Kazumasa Miyazawa, President andRepresentative Director, Solamitsu Co.

Digital Currency)
Tuesday,
July 25

The Latest Trends in Web3
in Europe and the U.S.

Web3 Foundation
Mysten Labs

September
6 (Wed.)New Guidelines for
Accounting Audits of Web3Enterprises

Japan Crypto Asset Business Association
Japan Institute of Certified Public Accountants

November 1 Taxation related to web3
(Wed.)

Japan Blockchain Association
Japan Crypto Asset Business Association
New Economy Alliance, Inc.

Thursday, Current status of the web3
November 2 white paper

RULEMAKERS DAOCurrent status regarding
LLC-type DAOs
Thursday, Winning Opportunities for
November 9 Japanese Startups in the
Web3 Industry

Sota Watanabe, Founder of Astar Network

39

Wednesday, DAO Rule Making Hackathon Shiba Farm
November (1st)
JPYC Corporation15
double jump.tokyo inc.
Overlay
Wednesday, DAO Rule Making Hackathon ODK Solutions, Inc.
November (2nd)Sony Corporation
22
Blockchain Promotion Association, Inc.
Civira Corporation
pNouns DAO
Wednesday, DAO Rule Making Hackathon KDDI Corporation
November (3rd)
Fracton Ventures, Inc.
29
Avispa Fukuoka
SUPER SAPIENSS
Toyota Financial Service Corporation
RULEMAKERS DAO
December DAO Rule Making Hackathon SOKO Lifetec Co.
6 (Wed.)(4th)
Makigumi Corporation
Tales & Tokens, Inc.
Sparkle Corporation, Michinoku DAO
D.N.A. Inc.
Neo Yamakoshi Village Caretaker DAO, Cattle
Horns ClubYear 2024 Draft Proposal for DAO(Continued to switch to a joint meeting with
Wednesday,
headquarters for discussion)
January 24
AVATECT" Avatar
Osamu Fujisawa, Director, Technology
Wednesday,
Management Platform
Strategy Center, TOPPAN Digital
February 7
Initiative
Corporation
Thursday, web3 promotion measures
TECHFUND Inc.
February 15 from Singapore
Ltd. and Emote Pte. Ltd.
DID/VC (Distributed
Digital Agency
Friday,ID/Verifiable Digital
OpenID Foundation Japan
February 16
Certificate)
DID/VC Co-Creation Consortium
web3 promotion measures
Sota Watanabe, Founder of Astar Networkfrom Singapore's*OnlineTuesday,
perspective (2)Kengo Masuyama, Representative Director,
February 20
BOBG PTE.
Mr. Ryo Matsubara, President, OASYS Pte Ltd.
Others (Explanation
Hideto Kawasaki, Executive Director
regarding the matters
Ministry of Economy, Trade and Industry
Friday,pointed out)
Mobile Content Forum, Inc.
March 8
Guidelines for Blockchain
Games

40

Friday,
March 15
Thursday,March 21
Tuesday,
March 26

DID/VC (Distributed
ID/Verifiable Digital
Certificate) (2)Follow-up on web3WP
Revision of the DAO Related
Ordinances
About Global DAO
Regulatory Reform to
Promote Entry of BusinessCompanies into the web3
Business

RULEMAKERS DAO
DataSign, Inc.
DNP Corporation
Government ministries and agencies
Financial Services Agency
RULEMAKERS DAOJapan Crypto Asset Business Association
KDDI Corporation
Square Enix Co.

41

Attachment 4

Proposal on DAO rulemaking- New Organizational Structure in JapanProposal regarding DAO rulemaking (English)
Recommendations on DAO rulemaking (Japanese)
Recommendations on DAO Rulemaking_Summary Version (Japanese)

42

Attachment 5

web3 Project Team Working Group

Name
Hironori Inagaki, Attorney at Law
Tsutomu Endo, Attorney at Law
Ken Kawai, Attorney at Law
Keiji Tonomura, Attorney at Law
Satoru Hirao, Attorney at Law
Masafumi Masuda, Attorney at Law
Yusuke Motoyanagi, Attorney at Law
Rei Matsukura, Attorney at Law
Yosuke Shiraishi

OfficeNishimura & Asahi
Nagashima Ohno & Tsunematsu
Anderson Mori & Tomotsune
Nagashima Ohno & Tsunematsu
Nishimura & Asahi
Mori Hamada & Matsumoto
Nishimura & Asahi(Working Group Office)(Working Group Office)43