Despite Japan’s reputation for being one of the most welcoming nations for fintech, online crypto gambling has struggled to take off in light of the country’s strict regulation.
In late March, the blockchain-based, decentralized application (DApp) platform Tron announced that it would block gambling DApps in Japan, bringing the issue of regulating crypto gambling back to public attention. Cointelegraph takes a look at the legal and cultural approaches to gambling in Japan, along with how developers believe attempts to halt crypto gambling can only last so long.
Tron complies with Japanese legislation
On March 31, Tron announced in a press release that it would remove gambling DApps in Japan in order to comply with local regulation.
The press release laid bare the firm’s intention to comply with local laws and regulation worldwide. With special mention of Japan, the company said that it does not “encourage or recommend any gambling DApps regarding the Japanese market.” Additionally, Tron suggested that Japanese developers should not attempt to develop any gambling DApps on its platform and for developers to actively block users that are found to have Japanese IP addresses.
Gambling is generally prohibited by the Japanese criminal code, aside from a few regulated, government-approved sectors — such as horse, boat, bicycle and automobile racing.
The company also stated its readiness to work with Japanese law enforcement in the event that any Tron DApps are found to have violated Japanese laws or regulations.
The question of Tron’s commitment to decentralization reared its head once again on May 10, as Lucien Chen, former chief technical officer and co-founder of the company, announced his decision to leave the project, citing excessive centralization among his reasons. Although the former CTO noted his pride in a now-deleted Medium post what the project had achieved so far, Chen said that the project is no longer true to its original mission of decentralizing the web:
“The reason for leaving is very simple. As a technical man, I feel very sad that the TRON has departed from the faith of ‘decentralize the web.’”
Along with stating his belief that real internet applications cannot currently function in the Tron network, Chen also highlighted his concerns with Tron’s delegated proof-of-stake (DPoS), as well as Super Representative governance and block production nodes:
“The DPOS mechanism of Tron is pseudo-decentralized. The top 27 SR nodes (block nodes) have more than 170 million TRX votes, and most of them are controlled by Tron. It’s hard for other latecomers to become block nodes, so they cannot participate in the process of block production.”
Chen will now focus on the launch of his own decentralized blockchain project — dubbed Volume Network — designed to adhere to his ideological principles concerning blockchain and mining practices.
Existing hurdles for blockchain and crypto in Japan
Japan is famously one of the most bullish countries worldwide with regard to both crypto and blockchain, with cryptocurrencies legally considered a means of payment. While the country has a relatively open approach to crypto, some issues do still remain that could possibly hold back more widespread adoption, concerning both gambling and payments.
The first is that Japan has a long-established love affair with cash. According to Nikkei research, roughly 65% of transactions are still carried out via cash, a rate almost double that of other economically developed nations.