Sony Group has officially entered Japan’s expanding blockchain market, unveiling its digital ledger platform, Soneium. The move marks the latest step by major Japanese companies in exploring blockchain technology, a trend that presents both opportunities and challenges for the nation’s regulators.
Soneium, introduced last month, is designed as a versatile platform for developers to create blockchain-based applications, potentially transforming Sony’s core businesses in gaming, music, and film. While the full scope of Soneium’s applications is still being developed, its potential to intersect with various forms of entertainment is already drawing attention.
“Entertainment-related businesses operating on a Web3 platform will continue to expand in the future,” said Jun Watanabe, chairman of Sony Block Solutions Labs, the unit spearheading the Soneium project.
Sony’s venture into blockchain mirrors moves by other Japanese corporations, including Nippon Telegraph & Telephone, Toyota Motor, and Mitsubishi UFJ Financial Group (MUFG). MUFG, Japan’s largest bank, is exploring the issuance of stablecoins, digital tokens designed to maintain a constant value.
A Push for Lighter Regulations
As Japanese companies embrace blockchain and digital assets, the industry is urging the government to relax stringent regulations. Prime Minister Fumio Kishida has supported the development of Web3 technologies—a decentralized version of the internet built on blockchain. Under his leadership, regulators have made it easier for crypto exchanges to list digital tokens, a move welcomed by the industry.
However, with Kishida’s tenure coming to an end, uncertainty looms over whether his successor will continue to champion the Web3 agenda. This uncertainty is coupled with growing frustration over Japan’s high tax rates on cryptocurrency gains, which can reach 55%, compared to the 20% tax on traditional investments.
“It will always take time for regulators to get comfortable with new business models,” said Angela Ang, senior policy adviser at blockchain intelligence firm TRM Labs. She added that the increasing innovation-forward tone from Japanese officials is encouraging companies like Sony to experiment with blockchain technology.
Strict Regulations and Lessons from the Past
Japan’s cautious regulatory approach to cryptocurrency is rooted in its history of major digital asset collapses. The infamous 2014 hack of Mt. Gox, once the world’s largest Bitcoin exchange, led to its bankruptcy and served as a wake-up call for regulators. More recently, DMM Bitcoin, a Japanese trading platform, suffered a $320 million breach, reinforcing the need for tight oversight.
Despite the challenges, Japan has made significant strides in regulating the crypto industry. The country introduced stablecoin regulations in 2023 and established a framework for crypto exchanges, focusing on investor protection. These measures, while stringent, have helped Japan weather the storm of global crypto market turmoil, such as the collapse of FTX. Japan was one of the few countries where customers of FTX’s local subsidiary were able to withdraw their funds after the platform’s global shutdown.
“Japan is crypto-friendly, but it’s not crypto easy,” said Fernando Luis Vázquez Cao, CEO of SBI Digital Asset Holdings, which operates the country’s leading online brokerage.
A Growing Digital Asset Market
Japan’s digital asset market is slowly recovering, spurred by a rally in Bitcoin and other cryptocurrencies. Monthly trading volumes at Japanese digital asset exchanges have increased, reaching near $10 billion, up from $6.2 billion in 2023, according to data from Ccdata.
However, industry players continue to grapple with Japan’s complex licensing rules. “Friction always came up when we were trying to start a new business,” said Yuya Hasegawa, a market analyst at crypto exchange Bitbank, who noted the challenges of launching a crypto custody service under the country’s regulatory regime.
For Sony, the possibilities offered by Soneium are vast. Some blockchain startups are exploring ways to trade in-game assets, while others are developing new methods for copyrighting and monetizing artistic content. Whether these digital ledger applications will have long-term viability remains a topic of debate.
As Japan’s crypto market evolves, Sony’s foray into blockchain signals its commitment to staying at the forefront of technological innovation in the entertainment industry. The future of Web3 in Japan, however, may depend on the country’s next steps in balancing innovation with regulation.
