Entertainment giant Sony Group Corp. is the latest company to join the ranks of Japanese companies seeking to leverage blockchain technology, a trend that presents a challenge to the Japanese government. Sony officially released the L2 network Soneium last month, hoping that developers can use it to develop applications to enhance the company's products. This is an ongoing work to combine Soneium with games, music and movies and create potential opportunities. Other Japanese companies exploring various blockchain-related plans include Nippon Telegraph & Telephone Corp., Toyota Motor Corporation and Mitsubishi UFJ Financial Group. The latter, Japan's largest bank, is considering issuing a stablecoin. The question facing the Japanese government is whether to listen to the crypto industry's demands and reduce onerous rules to reduce costs and stimulate growth. Under the leadership of Fumio Kishida, the Japanese Prime Minister who supports Web3, regulators did take steps to make it easier for digital tokens to be listed on cryptocurrency exchanges. But his term is coming to an end, and it is unclear whether any leader who hopes to succeed him will also support Web3, or further regulatory adjustments. A major gripe for industry players is that traditional investment gains are typically taxed at 20%, but cryptocurrencies are taxed at as much as 55%. "It always takes time for regulators to adapt to new business models, and success requires a long-term commitment of time and resources," said Angela Ang, senior policy adviser at blockchain intelligence firm TRM Labs. However, she said Japanese officials' "increasingly innovative policy tendencies" help explain why companies such as Sony are experimenting with digital ledgers. Japan introduced stablecoin rules in 2023 and developed a framework for cryptocurrency trading. Singaporean cryptocurrency lender Amber Group sold its digital asset trading platform in Japan to a Sony subsidiary last year. Before the sale, Amber's managing partner Annabelle Huang said the daily was a "very high-quality market, but it is heavily regulated." (Bloomberg)