Keeping pace with many other East Asian countries, Japan has been taking steps to legalize cryptocurrencies although China is moving in the opposite direction. Inspired by new flexible regulations, one of the Japans’ largest e-commerce firms has announced to launch a cryptocurrency exchange very soon. Japan approved digital currencies as legal means of payment in April 2017 and issued policies on crypto business.
This movement has paved a way towards the country’s further development as a safe haven of digital currencies. As other G20 countries are struggling to craft their own policies regarding crypto trade, Japan is likely to share its experience with the central bank governors and policymakers. The next G20 summit will try to adopt digital currency regulations that might be considered universal and would not contradict with the constitution or legislation of member countries.
The current attitude of Japan towards Cryptocurrency
Although Japan is clearly ahead of many other developed countries in terms of cryptocurrency regulations, there were weaknesses and gaps. Mt. Gox crypto exchange crashed in 2014 after a major theft of 850,000 bitcoins. Even larger theft occurred last year when 500 million NEM tokens (which was worth $530 million) disappeared from Coincheck. After these incidents, Japan tightened the regulations considerably to make cryptocurrency trade safer.
In August 2018, FSA commissioner Toshihide Endo told Reuters that Japan is trying to allow digital currencies to grow under proper regulations. Soon after that Japan issued formal regulations that made the country a suitable place for crypto traders. Influenced by a bunch of positive news from mainstream media, several large firms came forward with the introduction of cryptocurrency as a means of exchange.
For instance, SBI holdings allowed Ripple’s XRP for foreign payment with a view to expanding its business globally. An electronic retailer Bic Camera offered a 10% discount on all products if payments are made with Bitcoin. Railway travellers in Japan may soon be able to use cryptocurrency as Japanese Railways is planning on adding this payment method for travel on its network.
G20 members to learn from Japan
Japanese regulations can be considered as the most crypto-friendly at this point. However, it has to prevent illegal transactions. For this reason, regulatory policies include measures for blocking money laundering and financing to terrorists. So identity verification is now compulsory while making fiat to cryptocurrency exchanges. After the infamous hacks of Coinbase and Zaif Japan made the once-softer regulations a little tighter.
The new regulations will provide the highest level of safety to a client’s money in any case of exchange on digital currency platform. The upsides of the regulations include providing protection to crypto traders and facilitating a suitable environment for new business development. Other G20 members are certainly watching this progress of Japan and trying to formulate rigid regulatory measures, but differences in local financial policies became the major obstacle.
To come out from this stagnant situation, Japan is set to propose a set of rules that have been tested in a developed country. G20 leaders will certainly study the presentation and try to adopt a modified version of Japan’s regulations. Japanese name Satoshi Nakamoto is used as Bitcoin’s creator, which seems correctly fitting with the Japanese attitude towards the cryptocurrency. As East Asian countries are increasingly looking to make crypto industry regulated and normalized, recent panic associated with the sudden growth of Bitcoin is gradually decreasing.
Nils Grossberg is an entrepreneur from Tartu, Estonia. Nils Grossberg graduated from the University of Tartu with a bachelor’s degree in History. He is the co-founder and former CEO of Dagcoin OÜ, the software company behind the development of Dagcoin cryptocurrency and its ecosystem.