Will NFTs Give Japan an Edge Over Economic Rivals?

Non-fungible tokens (NFTs) present a unique opportunity to revitalize depressed regions of Japan. Thus, creating new jobs, injecting money into the local economy, promoting tourism, and preserving cultural heritage. Some hope that NFTs will aid Japan’s economic and cultural development. But will it work?

Non-fungible tokens (NFTs) are digital assets using blockchain technology to prove ownership and authenticity. These tokens have gained popularity as a new way to buy, sell, and trade digital assets. Such as art, music, and other media. The rise of NFTs presents a means to transform struggling regions of a country.

Helping the Cause

The first way NFTs can revitalize a troubled region is by creating new jobs. As the demand for NFTs continues to rise, so does the need for artists, designers, and developers who can make them. This presents an opportunity for people in depressed regions struggling to find work in traditional industries. By learning how to create and market NFTs, individuals can develop a new skill set highly useful for earning a living.

Additionally, selling NFTs can inject new money into a region’s economy. When an artist or creator sells an NFT, he or she receives payment in cryptocurrency. Which then becomes fiat currency. This provides a new source of income for the artist but also generates revenue for the region. As more NFTs are made and sold, the revenue flows to local businesses. Even to infrastructure and other projects that help to improve the region’s economy.

Total sales value of art and collectibles non-fungible tokens (NFTs) worldwide from 2019 to 2022 (in million USD) Source: Statista

Another way NFTs can revitalize a depressed region is by promoting tourism. Recently, some cities and areas have become known for their art scenes. This has drawn tourists from around the world. By promoting NFTs made by local artists and creators, these regions can further establish themselves as destinations for art lovers. This, in turn, can lead to higher tourism, positively impacting the local economy.

Finally, NFTs can help promote and sustain the cultural heritage of a region. By making NFTs that represent cultural artifacts, historical landmarks, and other important symbols of a region’s heritage, creators can help to raise awareness of its cultural significance. This, in turn, can lead to wider appreciation of the region’s culture. Thereby helping to preserve it for future generations.

Japan Rises to the Occasion

As the demand for NFTs soars, regions and countries in need must explore and leverage these opportunities. Japan, one of the most technologically developed nations, is taking strides toward utilizing NFTs.

Prime Minister Kishida Fumio would like to see the revenues from NFTs revitalize troubled regions of the country. In the Budget Committee of Japan’s House of Representatives on February 1, Fumio said there were “various possibilities for using web3” in Japan.

He added that the Japanese government could use tools, including nonfungible tokens (NFTs) and decentralized autonomous organizations (DAOs). In efforts to revitalize regions and promote “Cool Japan.” A national strategy aimed at showing off the country’s innovations and culture to the rest of the world.

“If you consider DAOs, people who are interested in the same social issues can form a new community,” said Fumio. “NFTs can also be used to diversify the income of creators and maintain highly loyal fans.”

Japan has been taking a stand and promoting nonfungible tokens (NFTs) and web3. A couple of high schools are providing courses to students on NFTs and web3. Some decentralized autonomous organizations are educating individuals on the basics of web3 and even specific policies that incorporate NFTs.

Demand for NFTs

Whiplus Wang, the head of the Japanese crypto conference IVS Crypto, told BeInCrypto: ‘In Japan, there is a special policy called Hometown Tax. With this, you can choose which region you want to pay your tax to. It doesn’t have to be the one where you live. When you pay the tax to a region, you get a gift back, something that is special to the area. Like a good they are known for providing.”

“Areas that don’t have anything special, they are giving out NFTs. Some of them would be coupons to local restaurants or something similar.”

Japanese artists, pop bands, and companies have reaped fortunes through NFTs. For instance, the NFT artwork of VR artist Aimi Sekiguchi sold at auction, on the first day, for 69.697 ETH, or around $147,000. In fact, The NFT industry is expected to grow steadily over the forecast period. Recording a CAGR of 38.70% during 2022-2028. The NFT spend value in Japan “will increase from $1361.50 million in 2022 to $8807.20 million by 2028,” a Japan NFT Market Intelligence report added.

To add to the demand, local authorities also set forth clear protocols for avoiding any ambiguity in tax matters.

Serious Concerns

Digital art and digital trading cards are represented by Non-Fungible Tokens (NFTs). These are non-replaceable digital tokens issued on a blockchain. While digital data is inherently free and easy to copy, NFTs are innovative. As they involve creating unique, one-of-a-kind data based on blockchain technology.

However, the legal status of NFTs and the regulatory framework surrounding NFT transactions still need to be clarified. Significant legal issues could arise in the event of unforeseen circumstances.

One potential legal issue is copyright infringement. NFTs often represent digital art. If someone creates an NFT of artwork without the proper permissions or licenses, it could lead to a copyright lawsuit. Another issue is fraud. Because NFTs are relatively new and unregulated, it may be easier for scammers to produce fake NFTs and deceive buyers. This could result in lawsuits or regulatory action.

There could also be legal issues related to taxes and ownership. As NFTs become more valuable, disputes may arise over who owns them and how to tax them.

NFT Boom in Japan May Face Legal Setbacks

The Civil Code of Japan defines an object of ownership as a “tangible item.” People can own tangible goods, not digital ones. This could led to legal issues regarding the ownership and transfer of non-fungible tokens (NFTs), digital assets that exist solely on a blockchain or digital ledger.

Since NFTs are not physical objects, they do not fit the traditional “tangible item” definition under Japanese law. This could foster uncertainty around Japan’s legal status and ownership of NFTs.

Takeshi Nagase, a partner at Anderson Mōri & Tomotsune, has opined, “Given the current technical characteristics of NFTs and the fact that ownership rights are not granted to intangible objects like NFTs, careful consideration is required as to what (including what rights) exactly are being traded in the sale of NFT art.”

Nagase added:

“NFTs, which are issued on blockchains, may not fall within the definition of ‘crypto assets’ regulated under the Payment Services Act of Japan. NFTs, like digital tokens issued on blockchain, are not clearly defined under Japanese law, and their legal status under Japanese financial regulations varies depending on their specific functions.”

A Balanced Approach

If Japan introduces regulations on NFTs, it could affect the global NFT market. Japan is one of the largest markets for NFTs. The rules could also affect the development and use of NFTs in other countries, as Japan’s regulations could set a precedent for other countries to follow.

However, it is essential to note that the impact of any potential regulations on the NFT market would depend on the specific details of the rules themselves. Well-designed and balanced regulations could help foster a more stable and sustainable NFT market in Japan and worldwide.

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