When the government of Japan launched a study group on the decentralized Web last October, it cast a wide net. Among those it tapped for advice was a sci-fi novelist. Taiyo Fujii, a writer known for works exploring the future of genetically modified food and space-based terrorism, did not disappoint. He suggested that the group organize itself as a DAO, a blockchain-based organization that members govern with the help of digital voting tokens. Fast-forward to last week, when Prime Minister Fumio Kishida brought the straight-out-of-sci fi idea to Japan’s legislature. To win the future, he suggested at a budget hearing, the country could organize its population using DAOs. One argument for this (and an idea that has been studied by Japan's Digital Agency) is that DAOs could reinject some dynamism into rural regions where populations are aging and shrinking, allowing their residents to coordinate in new ways online. (Think of the ways a Facebook group can reconnect long-lost high school classmates and help them plan a reunion, but more ambitious.) That might never happen, but the simple fact that Kishida plugged DAOs in Tokyo’s House of Representatives is testament to just how forward-leaning the Japanese government’s rhetoric has become in recent months. The shoutout is more than name-dropping. It’s part of an emerging strategy in Japan that calls for the country to take a more active role in shaping global policy consensus on Web3 — and for reconsideration of what laws are even enforceable in the face of new forms of online coordination that seem to defy oversight, according to a new report from Japan’s Digital Agency, as well as interviews with its authors. Japan has been struggling with how to regain the tech primacy it enjoyed in the later decades of the 20th century, when it was widely seen as the world’s most high-tech society. As the world copes with a new wave of digital technologies, Kishida sees a fresh opening for Japan to reassert itself. While tech regulators in Washington and Brussels tend to take a cautious stance towards decentralized internet applications, Kishida greets them with enthusiasm — an approach reminiscent of Bill Clinton’s embrace of the “Information Superhighway” in the 1990s. To get a sense of where Kishida’s government intends to steer the world’s third-largest economy, DFD caught up with the Digital Agency’s Web3 team, both before and after the December release of their report on Web3. The agency, which was established in 2021, is led by Minister for Digital Transformation Taro Kono, who placed second to Kishida in the Liberal Democratic Party’s last leadership election and is considered a potential successor to the post of prime minister. In formulating its approach to Web3, his staff is seriously contemplating everything from DAOs to NFTs to changes in the nature of human existence itself. Some of the recommendations are immediate and practical: The report sees NFTs as a natural avenue for promoting Japan’s international cultural cachet (think anime and manga), and calls for development of new intellectual property standards to promote their use. More broadly, it concludes that the interconnected, global nature of Web3 means that international consensus will be a more effective means of governing it than national laws or multilateral treaties. To that end, the report calls for the government to step up its presence at global technology forums. The report also concedes that — just as crypto’s earliest promoters intended — blockchains may make some forms of online activity effectively ungovernable. “Areas that are difficult to control with laws and regulations alone are expanding, and it is necessary to reconsider the enforceability of laws and regulations and the role of regulations,” it finds, according to a machine translation of the report, the accuracy of which was confirmed by Hiroki Kodama, an officer on the Digital Agency’s Web3.0 policy team (an official English translation is forthcoming). One sign of the agency's forward-leaning posture is its use of the term “Web3” itself, which has no settled definition. Digital Agency staffers noted that the U.S. executive branch tends to eschew the term in favor of more narrow, specific words like “digital asset” and “blockchain.” The November collapse of FTX had raised widespread doubts about the credibility of Web3 generally, though Japan’s own strict consumer protection laws meant that the funds of the exchange’s Japanese customers were kept safe. As for DAOs, agency staffers said they had yet to find real-world uses of them in Japan that were living up to the high hopes. They were unsure, too, whether they would keep the study group DAO going. But the final report recommends that the study group keep its DAO operating and that government ministries collaborate with the online group. “We think of the DAO as a good tool to coordinate Web3 policy with stakeholders,” Kodama said. The report’s consideration of futuristic scenarios does not stop at DAOs. It also suggests that rapid changes in human relationships to digital technology could radically change people’s conceptions of themselves. “Ultimately, in the future, there is a possibility that the concept of individuals and free will will change,” it concludes, “such as one person using multiple bodies for different purposes and multiple people sharing one body.” That may sound far-out, but for the Digital Agency the far-out is just another part of its jurisdiction. “It is necessary,” the report states, “to address systemic and regulatory issues from the distant future.
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