Asia Web3 Alliance Japan has formally submitted its proposal to the Securities and Exchange Commission (SEC) Cryptographic Task Force, promoting the creation of a joint regulatory partnership between Japan and the United States, and is working on tokenization and Web3 development.
The proposal, dated March 25th, addressed to Commissioner Hester Perth, called for coordinated efforts to reduce regulatory uncertainty, coordinate legal frameworks, and foster a comprehensive digital asset market.
The initiative seeks to establish structured cooperation between the SEC and Japanese authorities. This involves the Financial Services Agency (JFSA), the Ministry of Economy, Trade and Industry (METI), and the Bank of Japan (BOJ) developing the sharing standards for tokenized assets and blockchain innovation.
The proposal highlighted that the lack of legal clarity and interoperability between jurisdictions remains an important barrier to the sustainable development of both countries’ tokenized economies.
Hinza Asif, president of Asia Web3 Alliance, said:
“Tokenization will be a fundamental pillar of the economy of the future. Japan and the US share the responsibility to co-create a secure, innovative and inclusive digital financial system.”
Industry concerns
The proposal outlines several areas of concern for Japanese Web3 startups, including the lack of a clear classification system for tokens.
Many projects struggle to determine whether an asset is eligible as a securities, merchandise, stubcoin, or utility token, which has significantly increased compliance risk.
Furthermore, there is no formal regulatory channel for token products, making it difficult for startups to launch products domestically or expand globally.
The alliance pointed out that Japan is taking steps to modernize its digital asset policy environment, but regulatory guidance is fragmented and overly burdensome.
Startups need to navigate inconsistent tax procedures and overlapping legal reviews, often leading to delays and increased operating costs. Without regulatory interactions, many companies have also been excluded from participation in the US market, further restricting access to capital and strategic partnerships.
Core goals
To address these challenges, the Alliance proposes to launch a US tokenization and Web3 Regulation Collaboration Program.
The initiative prioritizes the development of a harmonized token classification framework, allowing both governments to define categories such as “tokenized securities”, “utility tokens”, and “non-security digital assets” using a consistent language. It also recommended guidance to distinguish between native digital assets and traditional financial products issued via blockchain technology.
Another core element of the proposal is regulatory interoperability. The Alliance encourages mutual recognition of compliant tokenized products, allowing cross-border issuance with round-trip disclosure requirements.
To support early stage innovation, this proposal advocates the introduction of a safe port mechanism in Japan, modeled on the SEC debate. This mechanism allows startups to operate within a supervised sandbox environment with a clear path to compliance.
Sharing criteria
The proposal also addresses the need for shared standards for token trading and custody. It encouraged regulators to build a common framework of licensed custodians and trading platforms, facilitating listings and transfers of recognized tokenized assets in both jurisdictions.
Additionally, it calls for the creation of a bilateral Web3 regulatory roundtable to support ongoing dialogue, share policy updates, and coordinate collaborative research.
As a next step, the alliance requested a virtual planning meeting with the SEC’s Cryptographic Task Force and associated Japanese institutions to begin discussions.
It also proposes the formation of a joint working group of legal and policy experts, mapping regulatory gaps and common foundations between the two countries.
As part of the pilot phase, the alliance proposed selecting several US and Japanese startups to participate in cross-border sandboxes to test compliant token issuance under the new framework.
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