In 2017, Japanese yen accounted for the highest percentage of Bitcoin (BTC) trading, surpassing the Chinese yuan.
According to a report by Coinhills.com, Japan is currently the top global player in the cryptocurrency market, accounting for 56.2% of BTC. The US dollar is at a distant second with 28.4% while other currencies account for 15.4%.
Japanese Regulation of Crypto
At present, there are 16 companies in Japan operating in crypto trade, according to the country’s Financial Services Agency (FSA). Cryptocurrencies are highly supported in Japan, thanks to its legal system that acts in regulation — rather than in restriction — of crypto trading. Such rules are the first and only in the world as of this time.
The regulation was made to prevent another hacking from happening like that of Coincheck hack., which was once the biggest cryptocurrency exchange in the country. Citizens lost an estimated $500 million due to the hack, and led the government to crackdown all crypto organizations, requiring them to adhere to the regulations to help stop risky trades and exposure to vulnerabilities.
Included in these regulations is for crypto organizations to Know-Your-Customer (KYC) and fulfill the Anti-Money Laundering (AML) requirements. This stable legal system is one of the reasons behind the thriving of crypto in the country. It has supported the blockchain industry and has helped establish credibility among traders.
The Significance of Foreign Exchange
Another factor that made Japan the global leader in crypto trading is the Japanese’s’ familiarity with securities trading, especially regarding foreign exchanges.
It is the country’s citizens themselves who make up the largest group of buyers and traders of crypto. For the Japanese, crypto is an alternative to stocks, foreign exchange, and bonds, helping it become a significant financial product.
In fact, BTC’s market capitalization in January 2018 was at $230 billion, with the market capitalization for all cryptocurrencies at $701 billion. In comparison, Japan’s largest stock, Toyota Motor Corp., is at $225.7 billion.
The Five-Point Criterium
However, the government believes that there are still some obstructions that keep crypto from being a mainstream currency, one of which is anonymity.
BTC and other cryptocurrencies have some level of privacy, but the FSA is fighting hard against coins that are almost impossible to track. When these currencies become too untraceable, cybercriminals are likely to use them to their advantage.
To stop cryptocurrency trading platforms from transacting with coins which have strong privacy features, the FSA is expected to implement new, sterner regulations.
The new set of rules highlights a five-point criterium from which the agency will decide whether a crypto organization can operate legally or not.
- Digital currency exchanges shall not manage and store users’ cryptocurrency in hot wallets, which may force users to use offline storage for customer holdings.
- No crypto company employee shall divert a user’s digital currency for any other use elsewhere.
- Exchanges must employ two-factor authentication for currency transfers.
- All exchanges must fully comply with all KYC laws and monitor user accounts for suspicious instabilities.
- A blanket ban on privacy-oriented coin trading will be imposed soon.
These regulations aim to improve contributors’ and buyers’ confidence in the crypto market.
How Cryptocurrency May Impact Japan’s Economy
BitFlyer CFO Midori Kanemitsu, and Coincheck Inc. Spokesperson Maki Yoshisuji, believe that cryptocurrency is a great invention that can change the way people live — and the Japanese love innovation. Transactions cost low because it does not require banks, and it benefits travelers and people who often transfer money.
Cryptocurrencies have found their way into the Japanese economy, with companies such as bitFlyer and Coincheck increasing the number of companies that will use crypto.
Bic Camera Inc., operator of electronics stores in Japan, will accept BTC at their outlets with support from bitFlyer by July. In Shibuya’s NEM Bar, XEM and BTC can be used to buy cryptocurrency-themed cocktails and other drinks.
It is likely that, soon enough, cryptocurrencies can have a significant impact on Japan’s economic growth. According to a study by financial services group Nomura, this may be due to a significant change in Bitcoin prices.
The report states, “The fact that the rise in Bitcoin prices was concentrated in 2017 Q4 could result in the wealth effect materializing in 2018 Q1, and if that is the case, we estimate a potential boost to real GDP growth on an annualized quarter-on-quarter basis of up to about 0.3 percentage points.”
Whether the hype with cryptocurrency is justified or not depends greatly on its practical use for people, both in Japan and all over the world.
NOAHCOIN is working to be the top crypto choice for buyers and traders, with its efforts to advance the hospitality industry and organic agriculture program in the Philippines by utilizing cryptocurrency.
Originally published at noahcoin.org on July 10, 2018.