Japan continues to embrace the cryptocurrency industry while its Asian neighbors tread carefully around the emerging technology. Who is right?
Yuriko Koike, governor of Tokyo since July 2016, has worked tirelessly to raise the profile of Japan's capital as a financial and fintech hub. She has succeeded in one area as Japan has emerged to take the crown as the global cryptocurrency hub.
While its Asian neighbors are curtailing cryptocurrencies the Japanese government has taken a pro-active approach. A revision in Japanese law in April 2017 ordered companies that deal with cryptocurrencies to become licensed by the financial regulator. In October last year, 11 companies received a cryptocurrency dealer license from the Japanese Financial Services Agency (JFSA).
Different Approach
The licenses come with a list of disclaimers from the JFSA stating that the Japanese Treasury does not guarantee or control the value of digital currencies. Authorities also highlight that cryptocurrencies are not necessarily backed by any assets.
The list of Japanese FSA-regulated cryptocurrency dealers includes QUOINE, BitFlyer, Bit Bank Corporation, SBI Virtual Currencies, Bit Trade, BTC Box, Bit point Japan, Fiscal Virtual Currency Exchange, and Tech Bureau.
Crypto's Suiting-Up
Tokyo now leads the world for crypto trading with home grown firm BitFlyer, one of the world’s highest volume cryptocurrency trading platforms, expanding globally on the back of its domestic charge. This week the firm opened in Europe opening a branch in Luxembourg following its push last November into the U.S. market.
In a move emblematic of the digital token industry's attempts to go mainstream, a crypto market maker poached its new chief executive for Japan from Goldman Sachs.
B2C2 is hiring Phillip Gillespie as its new CEO in Japan, effective January 29, 2018. Gillespie is currently an executive director at the investment bank's London office, where he has been a foreign exchange dealer for the past three years.
Trouble Ahead
Meanwhile China and South Korea have taken the opposite approach. The exponential growth and extreme volatility of bitcoin and other crypto coins has spooked financial regulators from Singapore to China, and nearly everywhere in-between. South Korea, Japan's near neighbor, is in the process of purging commercial banks and traders in cryptocurrency exchanges.
Many in Japan also believe that the country could unwittingly be importing a financial maelstrom. The regulator points to the in-built safeguards which when broken down though amount to a form of self regulation.
But concerns are still mounting, Satoru Kado of Mitsubishi UFJ Research and Consulting claimed in an interview with the «Nikkei Asian Review» (behind paywall) there is a growing uncertainty about expanding cryptocurrency trading in the country potentially causing a major shock to the financial system.
