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Japan: A Pioneer in the Crypto Market

Bitget Research
2024/07/08
Japan: A Pioneer in the Crypto Market

Overview

  • Japan was one of the first markets to explore cryptocurrencies, and currently has approximately 350,000 daily active traders.
  • Regulatory environment : The Japanese government recognized the importance of regulating cryptocurrencies early on and has implemented relevant policies. These policies focus on guiding the industry and encouraging its growth.
  • On-chain preferences : Japanese users are more familiar with NFT and DEX transactions and show a keen interest in participating in on-chain task platforms and metaverse gaming projects.
  • Trading preferences : Japanese users favor spot trading, primarily focusing on mainstream cryptocurrencies and tokens from local projects, with a strong inclination toward investing in tokens from established projects.
  • Centralized exchange preferences : Japanese users have a higher demand for localized centralized exchanges compared to most regions. In terms if d ecentralized exchanges, Japanese users primarily utilize leading decentralized exchanges on various chains such as Uniswap and PancakeSwap. The most commonly used wallets include MetaMask, Bitget Wallet, Phantom, Trust Wallet, and Coinbase Wallet.
  • Lastly, combining the above analysis, Bitget Research has made five major predictions regarding the future trends of the Japanese cryptocurrency market.

Introduction

Japan, a nation rich in history and culture, is renowned for its unique blend of traditional heritage and modern innovation. The country enjoys a global reputation in technological innovation and finance, with a robust financial system and cutting-edge fintech solutions that secure its significant position in the global economy. Japan was among the first nations to understand, focus on, and encourage the development of cryptocurrencies, making it a pivotal player in the global market.
Currently, the adoption rate of cryptocurrencies in Japan is among the highest worldwide. In recent years, Japan has progressively rolled out a regulatory framework for the cryptocurrency industry, with policies that guide and encourage the development of this sector. Consequently, cryptocurrencies are increasingly becoming a crucial option for alternative asset investments among Japanese users.
This report provides a comprehensive introduction to the current state of the Japanese crypto market through in-depth market research. It assists not only Japanese users in finding their ecosystem positioning and like-minded communities, but also Web3 project teams and crypto institutions to better understand and expand into the Japanese market.

1. Market Overview

1.1 Regional overview

In terms of the overall volume and acceptance of cryptocurrencies, Japan occupies a leading position globally. According to Chainalysis's 2023 Adoption Index, Japan ranks 18th worldwide, closely aligned with the United Kingdom and Canada and surpassing major Western European countries like France, Germany, and the Netherlands.
The breakdown of Japan's cryptocurrency Adoption Index reveals that the region exhibits similar global rankings for both CeFi and DeFi adoption rates, with P2P trading significantly below the global average.
Japan: A Pioneer in the Crypto Market image 0
Japan's crypto market exhibits two notable characteristics: "average across the board" and "specific preferences."
"Average across the board" means that, among East Asian countries, Japan's key indicators are closest to the global averages. As illustrated in the following two charts, Japan's data for cryptocurrency transfer sizes and the types of platforms used closely align with global averages, while other East Asian countries exhibit significant variations.
"Specific preferences" indicate that while many traders chase trends like Solana memecoins, AI, and DePIN, Japanese users maintain a strong interest in first-generation memecoins like SHIB and established blue-chip tokens like XRP and ADA.
Japan: A Pioneer in the Crypto Market image 1
Japan: A Pioneer in the Crypto Market image 2
Moreover, Japan is home to strong local exchanges such as Bitbank, BiFflyer, and Coincheck, which together dominate half of the local CEX market share. Middle-aged traders, in particular, show a strong preference for these local exchanges.

1.2 Cryptocurrency policy and cultural impact

1.2.1 Crypto policies in Japan
Early regulatory stance in Japan
In 2014, Japan faced one of the industry's most severe setbacks when Mt. Gox, a major global Bitcoin exchange, was hacked. This incident led to retail investors losing 850,000 Bitcoins.
In 2018, the Japanese local exchange Coincheck also suffered a hack, resulting in a loss of $534 million in crypto assets. Coincheck later announced compensation for affected users. These events highlighted the necessity of implementing laws to protect investors' funds, stabilize the cryptocurrency market, and ensure that crypto assets are regulated. Following these events, the Japanese government actively planned a regulatory scheme for crypto assets.
Current regulatory stance in Japan
Recently, the Japanese government has introduced clear regulatory measures to ensure that innovation in the cryptocurrency sector progresses safely and responsibly. These include:
  • In 2017, Japan amended the Payment Services Act to include cryptocurrency exchanges within the regulatory framework, implementing a licensing system overseen by the Financial Services Agency (FSA).
  • Since 2021, the cryptocurrency industry in Japan has been addressing issues related to the T ravel R ule. At that time, the FSA required virtual asset service providers to implement the travel rule.
  • In April 2022, the Japan Virtual and Crypto assets Exchange Association (JVCEA) introduced the Travel Rule in the Self-Regulatory Rules of the Association accordingly.
  • In October 2022, the Japanese government approved a cabinet resolution to amend current laws to curb money laundering using cryptocurrencies based on guidelines from the Financial Action Task Force (FATF).
  • In June 2023, Japanese lawmakers confirmed plans to implement stricter anti-money laundering (AML) regulations for the digital currency industry.
Overall, due to the hacking incidents at Mt. Gox and Coincheck, the Japanese government recognized the importance of regulating cryptocurrencies early on and implemented relevant policies. With recent regulatory measures, Japan's cryptocurrency regulations have become clearer and stricter, with a focus on guiding and fostering industry growth.
1.2.2 Cultural impact
Japan's cultural traits are deeply rooted in its history, not only shaping everyday social life but also profoundly influencing its arts, education, and business practices. The impact on the cryptocurrency industry can be seen in several key areas:
  1. Emphasis on education: Education is extremely important in Japanese society, with high expectations set by families and schools. This has led to a high average level of education among Japanese citizens, and consequently, Japanese participants in the crypto market tend to be highly educated.
  2. Emphasis on innovation: Japan holds a leading position globally in technology and innovation. This spirit of innovation extends into the Web3 space with innovative localized gaming projects and other tech initiatives.
  3. Emphasis on art: Japan boasts a rich tradition in art and literature, with a well-developed anime culture and intellectual property industry. Artists like Takashi Murakami utilize blockchain to facilitate secondary creation and copyright protection, contributing to a robust NFT user community in Japan.

1.3 Market size

Over the past six months, user traffic to CEXs has placed Japan's market size between that of Türkiye and Indonesia, at approximately two-thirds the size of South Korea's.
Estimates from April this year indicate that between 310,000 to 360,000 Japanese users engage in daily transactions on CEXs.
Japan: A Pioneer in the Crypto Market image 3

2. Local User Profile

2.1 User trading habits

2.1.1 Overall user profile in Japan
Image: Word cloud of Japanese cryptocurrency user habits
Japan: A Pioneer in the Crypto Market image 4
Source: Google Hot Searches
Japanese users display an open attitude towards cryptocurrency trading and project interactions, characterized by several key traits:
  • High acceptance of cryptocurrencies, holding a significant global share.
  • Focused on trending assets, as indicated by frequent mentions of keywords such as "Pepe," "AI," and "GPT" in the word cloud.
  • Focused on on-chain asset interactions, especially in the NFT sector, with significant interest in terms like "Wallet," "NFT," and "Blur."
2.1.2 Trading and interaction habits of Japanese users
Regarding trading, Japanese users prefer spot trading, primarily dealing in mainstream assets (BTC, ETH, XRP, SOL, DOGE) and tokens from local projects. This preference is shaped by: 1. Regulatory constraints in Japan that limit local exchanges only to trade FSA-approved cryptocurrencies and restrict derivatives trading to a maximum of 2x leverage. As a result, some Japanese traders involved in futures and altcoin trading opt for overseas exchanges: 2. The average proficiency in English among Japanese users is moderate, which affects their timeliness in discovering new projects. Instead, they are more focused on buying earlier generation memecoins (e.g., SHIB, DOGE), benefiting from their price surges. Moreover, many Japanese users are long-term holders primarily due to the high tax rates on cryptocurrency profits, which can reach up to 45%, prompting a focus on long-term investment returns rather than short-term gains.
In terms of application interaction, Japan's strong foundation in traditional gaming has led to many localized blockchain gaming projects. These projects often tokenize in-game items and assets, creating NFTs and other crypto assets. Thus, Japanese users are well-versed in on-chain DEX transactions, NFT transfers, and smart contract interactions.
Regarding payments and asset deposits/withdrawals, most users exchange cryptocurrencies at local Japanese exchanges, but some also engage in fiat transactions (P2P, third-party, card purchases). Japan has a relatively favorable crypto payment environment. In bustling areas like Roppongi and Ginza, several physical stores accept payments in coins like BTC and ETH.

2.2 Popular sectors and projects

2.2.1 Popular projects and sectors
Japan: A Pioneer in the Crypto Market image 5
Japanese users show high engagement in NFT trading, on-chain task platforms, on-chain trading, and Web3 games. Among the top ten most visited sites, two are NFT trading platforms (OpenSea and Magic Eden), indicating a strong enthusiasm for NFT trading among Japanese users. Additionally, Web3 task platforms and DEX data and trading sites are popular, reflecting a significant interest in participating in various airdrop promotions and trading on-chain assets.
Additionally, the Japanese market favors several local projects. For example, Cardano (ADA), often referred to as the "Japanese Ethereum," has gained considerable traction in Japan. Its founder, Charles Hoskinson, has conducted multiple seminars and activities in Japan to promote Cardano’s technology and vision. JasmyCoin (JASMY), an IoT platform founded by former Sony employee Kazumasa Sato, has also been promoting an "AI and IoT" narrative and saw considerable traffic because of its token price tripling in Q2 of this year. Other projects led by Japanese teams, such as Astar (ASTR) and Oasys (OAS), also enjoy high recognition and trading demand locally.
It is apparent that traditional DeFi projects and Layer 2 infrastructure projects are scarce among Japan's local initiatives. Instead, there is a focus on extending Web2 businesses into the blockchain sphere, such as adapting Web3 gaming projects, transitioning Web2 IPs to Web3, and incorporating IoT technologies. This makes Japanese projects less crypto-native, but they are at the forefront of integrating blockchain technology with the real world and implementing it.
2.2.2 Top crypto topics of interest among Japanese users in the last three months
Japan: A Pioneer in the Crypto Market image 6
From the search popularity of "cryptocurrency" related terms among Japanese internet users, the period from late February to early March this year saw the highest level of interest in cryptocurrencies over the past year. This peak coincided with BTC's rapid rise and testing of new highs.
Interestingly, the global peak in search interest, including in countries like the USA, UK, and UAE, occurred from March 3 to March 9. This suggests that Japanese internet users' peak interest in cryptocurrency terms appeared earlier, indicating a higher sensitivity to BTC price changes.
Analyzing the top search terms over the past year, Japanese users frequently searched for:
  • SHIB, DOGE, Solana, XRP, and ADA
In the last three months (February 28 – May 28), the top trending searches in Japan included:
  • PEPE, QUBIC, AEVO, and NOT
This data reveals:
(1) Japanese users have a high interest in first-generation memecoins, including DOGE and SHIB. This interest may also reflect a fondness for dog-themed memes, such as Shiba Inu and Akita. According to internal data from some exchanges, BABYDOGE is also one of the favorite memecoins traded by Japanese users. The latest popular memecoins like BOME and SLERF, however, have not appeared in the trending searches.
(2) Japanese users continue to be enthusiastic about early blue-chip tokens, such as XRP and ADA, which have not appeared in the trending search lists of most other countries over the past year. Additionally, the collaboration between the Japanese financial giant SBI Group and Ripple has helped maintain high traffic for XRP in Japan.
These observations further validate that the cryptocurrency trading scene in Japan is characterized by "specific preferences."

2.3 Local social platforms and media outlets

Type
Main platform
Language
Content focus:
Local social platform
Twitter
Japanese
Discussions primarily center around market trends, focusing not only on mainstream cryptocurrencies like BTC and ETH but also on various sectors. Some influencers promptly track and analyze small-cap tokens, although there is less content related to the Solana chain.
Local social platform
Youtube
Japanese
Popular content primarily focuses on specific trading analyses and highlights of memecoins and altcoins, alongside endorsements of these assets. Additionally, a few independent media outlets and professionals offer in-depth content, such as detailed explanations of cryptocurrency technologies.
Local social platform
Line
Japanese
As Japan's most commonly used social communication app, discussions primarily revolve around sharing project insights and opinions.
Vertical media
Cointelegraph
Japanese
Covers a broad range of topics, including macroeconomics, trending sectors news, market analysis, funding activities, regulatory updates, and industry analysis.
Vertical media
CoinDesk
Japanese
Covers a broad range of topics, including macroeconomics, trending sectors news, market analysis, funding activities, regulatory updates, and industry analysis.
Vertical media
CoinPost
Japanese
As the media outlet with the highest traffic in Japan, it covers a wide range of topics including macroeconomics, trending sectors news, market analysis, funding activities, regulatory updates, and industry analysis.
Vertical media
CryptoTimes
Japanese
Covers a broad range of topics, including macroeconomics, trending sectors news, market analysis, funding activities, regulatory updates, and industry analysis.
The primary platforms for local online communities in Japan are Twitter, YouTube, Line, and Telegram, predominantly using the official national language, Japanese, although English content is also available. Compared to other countries, Japan shows a distinct preference for vertical media; both CoinDesk and Cointelegraph operate dedicated Japanese-language websites with unique domain names and content fully in Japanese. Among these vertical media outlets, CoinPost has the highest traffic, with monthly visits reaching up to 2.5 million, followed by Cointelegraph, which garners about 1.5 million visits per month.
In terms of content, each channel varies in its understanding of and focus on blockchain technology. Topics range from macroeconomics, trending sector news, market analysis, funding activities, regulatory updates, and industry analysis, to specific trading analysis and reviews of memecoins and altcoins, as well as more in-depth foundational knowledge like detailed explanations of cryptocurrency technologies.

3. Competitive Landscape and Platform Advantages

3.1 Centralized exchanges

Japan: A Pioneer in the Crypto Market image 7
Over the past year, the traffic to CEXs by Japanese users has shown an upward trend, with unique visitors reaching 2.58 million in April 2024, representing a 17% year-over-year increase.
Coinbase and Kraken began exiting the Japanese market in Q1 2023, creating more opportunities for local Japanese exchanges and other global exchanges. Several strong local exchanges, such as Bitbank, bitFlyer, and Coincheck, collectively hold over 42% of the CEX traffic share. This is significantly different from the data observed in most European and Southeast Asian countries. These three local exchanges were established as early as 2014, predating several prominent international exchanges, giving them a substantial foundation in the local market.
Japan: A Pioneer in the Crypto Market image 8
From the user demographics, the gender ratio of Japanese users on CEXs is approximately 3:1 in favor of men. Regarding age distribution, users aged 18-34 and those over 35 are roughly equal, each accounting for half. Interestingly, the younger age group (18-34) prefers international exchanges, whereas the older group (over 35) tends to favor local Japanese exchanges.
Japan: A Pioneer in the Crypto Market image 9
In addition to the aforementioned local exchanges, Rakuten Wallet also demonstrated popularity among users. Essentially a CEX, Rakuten Wallet is backed by Rakuten Group. It supports users in trading cryptocurrencies with Japanese yen and allows the conversion of yen into Rakuten Cash (R Cash). This integration facilitates the use of Rakuten Cash for cryptocurrency investments and payments, adding significant convenience to users' crypto investments and everyday spending.

3.2 Decentralized exchanges

Japan: A Pioneer in the Crypto Market image 10
The top three DEX websites visited by Japanese users show a significant deviation from other regions: PancakeSwap, Jupiter, and Uniswap. Japan is one of the few areas where Uniswap does not rank first and has lower traffic than PancakeSwap. This indicates that Japanese users have relatively less interest in trading tokens on Ethereum and Base chains compared to those on Solana and BSC chains.
Most users access these decentralized exchanges directly, while some use Google search or social media links. This indicates that Japanese users place a high value on the reputation of decentralized exchanges, and once they develop a habit of using a particular platform, they tend to show a degree of brand loyalty. In practice, while Twitter plays a role in directing traffic to these platforms, it does not constitute a large proportion.

3.3 Wallets

Japan: A Pioneer in the Crypto Market image 11
(Note: Some popular wallets, such as the Binance Wallet and OKX Wallet, share the same app with their centralized exchanges, making it impossible to extract standalone traffic data, so they are not displayed in the table above.)
In terms of wallet usage, the top five wallets in Japan are MetaMask, Bitget Wallet, Phantom, Trust Wallet, and Coinbase Wallet.
MetaMask, as one of the earliest wallets in the Ethereum ecosystem, enjoys a strong first-mover advantage. Most EVM-compatible chain ecosystem projects prioritize support for MetaMask, making it very popular not only in Japan but globally.
Bitget Wallet has surged to the second spot in downloads in Japan, second only to MetaMask. This success is attributed to rapid iteration following sharp market insights. Bitget Wallet currently supports over 100 chains and offers an innovative liquidity aggregation algorithm for swaps, providing a smoother trading experience. Additionally, it has recently expanded its features to include support for the Solana chain, incorporating on-chain anomaly alerts and smart market trend recommendations. This has enhanced users' awareness of activities on the Solana chain and helped them seize more on-chain alpha opportunities in the booming memecoin market. In the NFT space, Bitget Wallet’s marketplace is the first platform to allow purchasing NFTs with any cryptocurrency. Understanding and quickly meeting user needs has propelled Bitget Wallet to second place in downloads in Japan.
Amid the popularity of the Solana ecosystem, Phantom, the most popular native wallet for the Solana network, has risen to the third position. Phantom has built a substantial network of quality partners within the Solana ecosystem. This network, coupled with the current popularity of the Solana ecosystem, has created a significant traffic matrix, leading to a rapid increase in Phantom's user base. The popularity of the Phantom wallet in Japan is driven by several factors: the strong recovery of the Solana ecosystem, the booming memecoin market, wealth opportunities within the ecosystem, and expectations of potential airdrops.
Ranking fourth, Trust Wallet, launched in 2017, holds a significant first-mover advantage. Its simple and user-friendly design aligns well with the preferences of Japanese users, earning it considerable popularity.
Ranked fifth is Coinbase Wallet. Although Coinbase announced its exit from the Japanese market in January 2023, rendering the Coinbase exchange unusable for Japanese users, Coinbase Wallet continues to operate normally. Backed by the authority and security of Coinbase, the Coinbase Wallet remains a popular choice among users in the region.

Conclusion

Japan is renowned for its unique blend of traditional culture and modern innovation, with a faster acceptance of new developments compared to many other countries. It was among the first nations to understand, focus on, and encourage the development of cryptocurrencies. This report explores Japan's cryptocurrency market through three main aspects: "Market Overview," "Local User Profile," and "Competitive Landscape and Platform Advantages."
From a market perspective, Japan ranks 18th globally in terms of overall cryptocurrency volume and acceptance. The daily active user count on centralized exchanges is about 350,000, comparable to that of Türkiye.
From the standpoint of regulation and cultural influences, following the Mt. Gox incident, the Japanese government recognized the importance of regulating cryptocurrencies early on and implemented relevant policies. Due to a societal emphasis on education, innovation, and the arts, Japanese users are generally well-educated and show a high interest in blockchain games and NFTs.
Japanese users are well-acquainted with cryptocurrency trading and on-chain project interactions, displaying several key characteristics:
  • A preference for spot trading, primarily dealing in mainstream coins and tokens from local projects.
  • High interest in first-generation memecoins such as DOGE and SHIB, along with early blue-chip tokens like XRP and ADA.
  • Active participation in NFT trading, on-chain task platforms, on-chain trading, and Web3 games.
In terms of competitive landscape and platform advantages, localized exchanges hold over 42% of the market share, significantly higher than in Western Europe and Southeast Asia. Decentralized exchanges show less difference in data, with user habits focused on top decentralized exchanges on chains like Solana, BSC, and Ethereum. In terms of wallet usage, MetaMask, Bitget Wallet, Phantom, Trust Wallet, and Coinbase Wallet rank as the top 5 wallets in Japan.
Finally, based on this comprehensive study of the Japanese market, Bitget Research anticipates the following developments in the Japanese market for the second half of 2024, for readers' reference:
  • With the rollout of global compliance policies and the listing of crypto asset ETFs in the USA, more institutional and retail investors in Japan are expected to invest in cryptocurrencies.
  • The cryptocurrency adoption rate in Japan is expected to continue rising, maintaining a position in the global top 20. The daily active users trading cryptocurrencies are projected to increase from 350,000 in 2024 to approximately 500,000 by the end of the year.
  • Japanese users will likely remain enthusiastic about participating in localized projects, such as blockchain games, with increasing engagement in NFTs and on-chain task platforms.
  • One or two blockchain gaming projects in the region may receive capital support, becoming significant global cryptocurrency initiatives.
  • Wallets with transaction aggregation functions and NFT trading capabilities are expected to gain more popularity among Japanese users.
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