The end of 2022 is only a few days away, and as the first year of active public interest in Web 3.0, Japan and the rest of the world have been paying attention to the Web 3.0 industry, with many industry terms such as NFT, DeFi, and DAO trending on the Internet. In reviewing developments that have received particular attention in the crypto asset industry, we have selected eight potential milestone global developments in Web 3.0 and crypto asset news that occurred this year and are presenting them to you in chronological order.
January Crypto asset market value down over $1 trillion from November 2021
From Bitcoin’s high of $55,000 (about ¥7.3 million) in November 2021, the price fell to $36,000 in January 2022, and the total market value of crypto assets declined by more than $1 trillion (about ¥114 trillion). As high-risk assets around the world were hit by the U.S. monetary authorities’ intention to lift stimulus measures, the crypto asset industry also experienced record volatility and was widely discussed by various media outlets. The term “Web 3.0” began to trend around this time.
February "Donations to Ukraine" using crypto assets began
With the start of the Russian military invasion of Ukraine, the Ukrainian government launched an appeal from its official Twitter account at the end of February for crypto asset donations as a way of providing financial support. Although this was an unusual case, government officials, including Ukraine’s deputy prime minister and diplomats, shared the wallet addresses to receive donations, and many donations were received in Bitcoin, Ethereum, and other so-called altcoins and NFTs (nonfungible tokens). The effective use of crypto assets as a means of providing direct and immediate support for an international emergency was unusual, but it also attracted a great deal of attention as a means of making donations without the need for an intermediary.
April Central African Republic becomes the second country in the world to make bitcoin the legal tender.
At the end of April, the Central African Republic announced that it had adopted bitcoin as legal tender, becoming the second country after El Salvador to do so. The Central African Republic is also known as one of the poorest countries in the world, and since gaining independence from France some 80 years ago, the country has experienced several coups d’état and other instabilities. While there are pros and cons to Bitcoin becoming legal tender, there are also many who believe that it will help financial inclusion in countries where unstable national political conditions prevent people from having bank accounts or other access to financial services, and there have been numerous discussions regarding such a policy move, mainly in Latin American countries.
May German Ministry of Finance issues guidelines for crypto asset income tax
The German Federal Ministry of Finance issued guidelines for the treatment of crypto assets for domestic taxpayers, including corporations and individuals. The guidelines include a provision stating that “according to income tax laws, crypto assets (virtual currencies) are exempt from taxation if sold after at least one year from acquisition, even if a profit is made.” This represents a major revision of the taxation system for gains on the sale and purchase of crypto assets. Other key structures in the crypto asset industry, such as staking, mining, and airdrops, are also addressed in the guidelines. German officials have stated that the guidelines are interim and not final, but they will continue to work with tax authorities to address income tax issues for crypto assets and other tokens.
May 7 trillion yen disappears due to the collapse of the S. Korea-based TerraLuna
Luna and Terra, crypto assets from South Korea, fell sharply from mid-May, upsetting the global financial industry, including the crypto asset market. The price of Luna plummeted by 97% in 24 hours, including Terra, a stablecoin designed to be pegged to the US dollar, hurting many retail investors in South Korea. This turmoil caused a run on the crypto asset market, bitcoin fell to nearly $ 27,000, and the US Treasury Department announced that it would encourage regulation of stablecoins. Reminiscent of the Lehman Shock, the Terra Shock incident was dubbed “Black Thursday” in South Korea, and it caused both confusion within the industry and calls for regulation of foreign financial institutions.
October Lugano, Switzerland - Bitcoin fee payments now acceptable in the city.
In the city of Lugano, Switzerland, since the beginning of October, McDonald’s and more than a dozen other locations have begun accepting Bitcoin, the US dollar-linked stable coin Tether (USDT), and the Swiss franc-linked stable coin LVGA as crypto assets. The mayor of the city says that this will “legalize bitcoin as de facto legal tender,” and plans to increase the number of locations where it can be used for tax payments and utility bill settlements.
The geopolitical influences of the German-speaking North, the French-speaking West, and the Italian-speaking South (Lugano is in the southern region) have a great influence on the cultures of each region, respectively, so each region has its own unique policy for the realization of the financial city concept. This development is also an example of a speedy public-private partnership project related to crypto assets in that it was realized in about six months after the city of Lugano and Tether signed an MOU in March of this year with the goal of establishing a European center of excellence for the introduction of blockchain.
November FTX in the U.S. collapses
The crypto asset industry was dealt a major blow in November with the financial collapse of the leading U.S. crypto exchange FTX and its subsidiary Alameda Research. 130 related companies in the FTX group filed for bankruptcy in the U.S., assets were seized at various locations, and the exchange services provided by FTX were shut down across the board, affecting many crypto asset holders around the world. The extent of the damage is particularly evident in the filings as of November, which revealed that the top 50 creditors were owed $3.1 billion (approximately 440 billion yen). The market capitalization of crypto assets also declined by nearly 40 trillion yen due to the revelation of FTX’s critical financial situation.
This incident, which is being called the “FTX shock,” has led many countries to move to strengthen their regulations on crypto assets and Web 3.0.
November Nippon DOCOMO invests 600 billion yen in Web 3.0
On November 8, NTT DOCOMO announced that it will invest 500 to 600 billion yen over the next 5 to 6 years to utilize Web 3.0. NTT stated that the focus will be on developing the underlying technology, including blockchain wallets, token issuance and security, and invite participation from a wide variety of industry sectors through a DAO (Decentralized Autonomous Organization) type approach. NTT also revealed that it will establish a new company in 2023, aiming to become a global de facto company originating from Japan, and mentioned that it will work on solving environmental issues and regional development by utilizing the strengths of Web 3.0. The project was being widely discussed in Japan as a huge investment by one of Japan’s largest companies; unfortunately, as mentioned previously, the FTX bankruptcy incident happened shortly afterwards, and the news will continue to attract attention as to how it will face the stormy waters of the Web 3.0 industry.
The Internet has been attracting attention since the second half of 2022, with words such as Web 3.0, and crypto-assets becoming the top searched terms around the world. Although there have been some incidents that have shaken the industry, examples of their use in legal tender, payment of bills, and other aspects of daily life have risen in some countries, and some major companies have entered the market as the new frontier.
We will continue to watch closely to see if 2023 becomes a breakthrough year for the crypto asset industry. I wish you all a Happy New Year!