Event Report “The 1st Cocone Web3 event – Anatomy of the Web3 Business Scheme in Japan -” Summary
※This article is machine translated.
On September 21 (Wed.), a talk session was held at the Tokyo office of Cocone, focusing on legal risks and solutions for web3 business.
Here is a digest of the event!
theme
- What is the reason why web3 business is not possible in Japan?
- Legal and Tax Hurdles and Solutions for Token Issuance and Ownership in Japan
<Speakers
■Speakers
So Saito / Representative Attorney at Law, So & Sato Law Offices
Kimihiro Mine / President, finoject
Momoko Hiraiwa / Executive Officer, General Manager of Support Division, General Manager of Legal Department, Attorney at Law, Cocone Corporation
■Moderators
Yosuke Tomita / President, Cocone Connect K.K.
*Honorifics are omitted below.
1. What are the reasons why web3 business is not possible in Japan?
Q. What are the regulations/concerns in Japan that each of you think are important?
Japanese buttercup (Ranunculus japonicus)
Regulations
Issuance of non-fundable tokens (“NFTs”) is not currently regulated.
Fungeable Tokens (“FTs”) are regulated
⇒ Obtain your own crypto asset exchanger license for FT issuance and exchange in Japan.
Or request an Initial Exchange Offering (“IEO”) from an exchange
From a tax perspective
FT is taxed at fair value to the issuing company at the end of the period.
There is a prospect for revision of year-end fair value taxation.
From an accounting standpoint
Unresolved issue of how to account for FTs issued and held by listed companies
If the company is privately held, this problem does not exist and it is possible to become an IEO.
three roots
Regulations
What you are all concerned about is whether you will be subject to regulations or fines? Isn’t that what you are asking?
Someone has to be the first penguin to bring the issues and problems of regulation to light.
Q.What about the possibility of listing on the stock exchange when tokens are issued?
Mr.Saito
Audit is the first and minimum requirement.
three roots
GMO Internet Group, Inc. is listed on the GMO Internet Group, Inc.
Different risks involved when the TSE considers listing a stock.
⇒Crypto asset exchange
There is always a risk of leakage and hacking since the crypto assets of an unspecified number of own customers are entrusted to the company.
⇒FT Publisher
at risk if they are self-holding.
There are other risks, such as reputational risk and risk of damages, but there is no structural risk of losing hundreds of billions of dollars due to hacking.
Easier to list than crypto asset exchanges
Q.Regarding the crypto asset exchanger license when selling FTs, if an FT issuer wants to sell FTs, won’t they be caught up in the crypto asset exchanger license issue? What kind of response would be acceptable, and if not, can it be solved by issuing FTs overseas?
Japanese buttercup (Ranunculus japonicus)
A crypto asset exchange license is required to sell FT to Japanese residents.
No business has its own license.
There is an option to do an IEO with the existing crypto asset exchanges.
A license is also required to issue FTs overseas and sell them to Japanese residents.
(As an example of overseas publication, the stance of “not selling to Japanese residents”)
“Sell widely to the public” is not allowed to sell to an unspecified number of people
I think there is no problem to sell FT first to partners such as business associates, right?
Q. One of the reasons Cocone cannot provide services for Japanese customers is the issue of ” aming Law “. There is a criminal law risk when gacha items are converted to NFT and sold in the marketplace. Can we take this with First Penguin?
Japanese buttercup (Ranunculus japonicus)
Criminal law risk is hard to take.
The Sports Ecosystem Council and blockchain organizations are working on guidelines for the NFT mess in general. Once that is issued, it is a risk that can be taken.
Q. Cocone is considering targeting within Southeast Asia, not for Japan. Where is the governing law for the Terms of Use?
Japanese buttercup (Ranunculus japonicus)
First of all, is it a good idea for a Japanese corporation to sell gacha to overseas customers? There is a point of contention that
Assuming that gacha sales are NG, it would be better if they are sold by an overseas corporation and the governing law is not Japanese law.
Q.Is it difficult in Japan to have a contest-type model or ranking system in GameFi, where everyone bets and the winner takes it all?
Japanese buttercup (Ranunculus japonicus)
It would be difficult in Japan because it would be like gambling.
If you want to make it safe under Japanese law, you should target only foreigners from overseas corporations, verify their identity and IP, and ban them if they are Japanese. The discussion is about how far to go in dealing with this.
2. Legal and tax hurdles and solutions for token issuance and ownership in Japan
Q. IEO is an option in Japan. How does it work, and can it be done as soon as a business wants to do it, or what are the hurdles?
three roots
This is totally different from the usual handling and listing of new currencies.
The company will conduct an examination that corresponds to a listing examination in the stock market.
(IEO) is not something that cannot be done.
I can’t give you a specific number of months to do it.
Q.When considering IEO, is it a plus factor that you already have customers in Japan? Cocone is a business that has customers in web2 smartphone apps, but let’s say we are competing in web3 and GameFi.
Japanese buttercup (Ranunculus japonicus)
If you are looking for customers in Japan from the beginning, then of course you have an advantage.
Q.Are funds raised by an IEO recognized as sales and subject to taxable income?
Japanese buttercup (Ranunculus japonicus)
Taxable income on IEO sales is the same as in other countries, just at a different tax rate.
ex.Japan 30%,Singapore 14
3. Questions from participants
Q.With Ethereum moving to PoS, there seems to be a lot of talk about “it’s securities because it’s PoS “?
Japanese buttercup (Ranunculus japonicus)
I don’t know about “securities because PoS. “
“Securities ” is defined differently in the U.S. and Japan, so are we talking about the U.S.?
⇒American definition: the definition is broad. Anything that leaves the profit to others is a security.
⇒Japanese definition: Invested, in business, and with principal redemption of 100% or more, including dividends.
The JCBA (Japan Crypto Asset Business Association) concluded that staking is not a security by itself. The same is true for Ethereum’s PoS.
(But I don’t know about the U.S.)
three roots
There are some companies that provide staking services in Japan, but we have not been pointed out by the FSA. At this point, I think it is safe.
Q.Recent developments have been blind when NFTs are initially MINTed.
The trend is to find out the contents after a certain period of time; is this different in nature from the NFT mess?
Japanese buttercup (Ranunculus japonicus)
Industry groups argue that gacha, packaged sales, rebills, and random sales are the same thing.
Synthesis is beyond the scope of this discussion.
Q. Regarding the pros and cons of using FTs or NFTs as compensation for labor. There are examples of handing out special NFTs or FTs to highly enthusiastic participants to work for them, but is there any problem with doing this in Japan?
Japanese pepper (species of Sichuan pepper, Zanthoxylum piperitum)
No problem.
The labor law states that wages must be paid in currency, but does not mention outsourcing or community members.
We are just exchanging labor and heat for crypto assets, so it’s not a problem.
4. Final message to the audience
Japanese pepper (species of Sichuan pepper, Zanthoxylum piperitum)
We have to decide which is the best solution while gathering information.
It’s a difficult field, but the returns are great if you can get it done.
How did you like our condensed report of the event, which lasted about an hour and a half?
The full version is available on the ” web3 event ” on YouTube, so please visit here for more details!
In addition, Cocone recruits planning and development members for its three web businesses and legal staff.
If you are interested, please take a look at the employment information here.
Legal Affairs
⇒https://hrmos.co/pages/cocone-recruit/jobs/B-0011
