Asia Web3 Alliance suggests joint US-Japan efforts in tokenization

The Asia Web3 Alliance Japan has put forward a suggestion to the U.S. Securities and Exchange Commission's Crypto Task Force, urging for a strategic partnership on matters related to tokenization and Web3 regulation.

The proposal addressed to the SEC pushes for a collective endeavor among the SEC, Japan's Financial Services Agency, the Ministry of Economy, Trade and Industry, and the Bank of Japan. This collaboration aims to create regulatory clarity and encourage interoperability between the two markets.

The plan emphasizes several principal goals, such as creating a uniform token categorization system to differentiate between tokenized securities, utility tokens, and non-security digital assets.

Additionally, it suggests a safe harbor system for initial token projects, mirroring models being examined in the U.S. This would enable startups to evaluate their projects in a controlled regulatory setting before achieving complete compliance.

Furthermore, the alliance advises establishing standards for cross-border token issuance, trading, and custody. This aims to improve regulatory uniformity and investor confidence.

The proposal also implies a mutual recognition framework that would permit compliant tokenized offerings to function smoothly between the two countries, diminishing legal and tax uncertainties that currently obstruct Web3 innovation.

U.S. and Japan roundtable

A crucial aspect of the proposal is the initiation of a U.S.–Japan Web3 regulatory roundtable. This project would facilitate continuous discussions between regulators, legal professionals, and industry leaders, ensuring that both countries can exchange policy advancements, case studies, and research findings.

The Asia Web3 Alliance contends that regulatory ambiguity continues to be a significant obstacle for Web3 startups, especially in determining token categories and ensuring compliance across various jurisdictions.

The letter expressed that the collaboration would "develop guidance for differentiating native digital tokens vs. traditional securities issued via blockchain."

As a subsequent step, the alliance suggests an initial planning meeting between SEC officials and Japanese regulators and the selection of pilot projects to trial cross-border tokenization frameworks.