The Asia Web3 Alliance Japan has formally submitted a proposal to the U.S. Securities and Exchange Commission (SEC) Crypto Task Force, advocating for a strategic partnership to address tokenization and Web3 regulation. This initiative aims to establish regulatory clarity and foster interoperability between the U.S. and Japanese markets, ensuring a balanced approach to fostering innovation while maintaining investor protection.

Key Objectives of the Proposal

The proposal outlines several critical objectives designed to support the growth of the Web3 ecosystem:

  • Token Classification Framework: The development of a harmonized framework to clearly distinguish between tokenized securities, utility tokens, and non-security digital assets. This classification would reduce confusion and aid compliance efforts for startups and established firms.
  • Safe Harbor Mechanism: A recommendation to create a controlled regulatory environment for early-stage token projects, allowing startups to test their ideas before achieving full compliance. This mechanism is modeled after similar initiatives being explored in the United States.
  • Cross-Border Standards: Establishing guidelines for token issuance, trading, and custody across borders to enhance regulatory consistency and boost investor confidence in the global Web3 space.
  • Mutual Recognition Framework: Suggesting a system where compliant tokenized offerings can operate seamlessly between the U.S. and Japan, minimizing legal and tax uncertainties that currently hinder innovation in the sector.

U.S.–Japan Regulatory Roundtable

A key component of the proposal is the launch of a U.S.–Japan Web3 regulatory roundtable. This initiative aims to facilitate ongoing dialogue between regulators, legal experts, and industry leaders from both nations. By sharing policy developments, case studies, and research findings, the roundtable would help ensure that both countries remain aligned in their approach to Web3 regulation.

“Regulatory uncertainty remains a significant challenge for Web3 startups, particularly in defining token categories and ensuring compliance across jurisdictions,” the Asia Web3 Alliance emphasized.

The proposal also highlights the importance of developing guidance to differentiate native digital tokens from traditional securities issued via blockchain technology.

Next Steps in the Collaboration

To move the initiative forward, the Asia Web3 Alliance recommends an initial planning meeting between SEC officials and Japanese regulators. This meeting would focus on selecting pilot projects to test the proposed cross-border tokenization frameworks, paving the way for smoother regulatory compliance and innovation.

The alliance believes that such collaboration will accelerate the adoption of tokenized assets and Web3 technologies, benefiting both markets and driving the next wave of digital transformation.

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