Cryptocurrency and blockchain are global phenomena, but they are still susceptible to restriction by governments, mostly because the services that support them are centralized. Exchanges, wallet services, and other services providing access to the market are indeed connected to the blockchain, but easily blocked by governments like China due to their traditional hosting methods. Until total decentralization is a reality, it will always be possible to limit blockchain’s proliferation.
However, there are governments and nations which have seen blockchain and immediately given their wholehearted approval. Japan is the most well-known in this regard and is universally recognized as a cryptocurrency haven by enthusiasts everywhere. The country has taken the crypto torch and forged ahead where its peers have not dared to go, and has already benefitted from its decision to embrace, rather than deride this young market. For the following reasons, Japan remains the best place for cryptocurrency today.
1.Japan Recognizes Bitcoin as Legal Tender
Bitcoin carries the designation of legal tender and “means of payment that is not a legal currency” in Japan, and it can be used for a bevy of retail services everywhere in the country. While most of the stores and shops that accept Bitcoin are concentrated in urban areas, even rural Japan has caught Bitcoin fever. This may be why Japan is responsible for over 30% of the world’s Bitcoin transactions, and much of the young industry’s innovation.
2.An Epicenter of Exchanges
The legal status of Bitcoin has made Japan a cutting-edge fintech hub, and many cryptocurrency-related platforms and services are being established in the country. Apart from a truly impressive array of cryptocurrency exchanges, Japan is also home to many cryptocurrency-based derivatives and financial instruments that won’t be found elsewhere. Japanese residents can buy a Bitcoin Bond, for example, which is issued by Japan’s Fisco Ltd. There are even exchanges like Bitbank that will pay yearly fees to users who lend the bank their Bitcoin.
Along with the arrival of relatively relaxed cryptocurrency regulations in 2017, regulators announced that 11 exchanges had already been vetted and approved by the Financial Services Agency (FSA). This number has only grown, making Japan one of the most competitive and saturated environments for crypto exchanges in the world.
3.Proactive Response to Issues
In the earlier days of Bitcoin, Japan’s regulatory policy had been one of growth rather than strict compliance or security. The country had an ambition to become the world’s central blockchain hub, but some unfortunate events forced them to change their strategy. The 2014 hack of Mt. Gox and loss of multiple hundreds of millions of dollars in cryptocurrency was a real shock, and it was matched by January’s Coincheck hack for over $530 million. Despite these cataclysmic events, Japan has taken a level-headed position on the matter.
After each of these events, Japanese regulators have enforced the complete reimbursement of customers who had lost their coins and fiat money, which is an encouraging standard to set. Additionally, Japan doesn’t balk at its unique challenge to balance favorable regulation with strict enforcement of healthy financial policies. After a plethora of bad actors jumped into the space, new regulations have been released to set a foundation for transparency and sustainability.
4.An ICO-Inclusive Business Sector
The last year has been a turbulent time for ICOs—initial coin offerings—which is a new way for blockchain-based startups to fund themselves by issuing tokens. ICOs are one of the most significant concepts to result from the proliferation of blockchain technology and smart contracts, and though the ability to skirt financial authorities is good for business, it has consequences for consumers.
Like some exchanges and other peripheral blockchain services, there have been several ICOs that accepted peoples’ capital in bad faith. To stem the tide of fraudulent blockchain services, Japanese regulators are looking at ways to enforce healthy ICO benchmarks. The country recently commissioned a public study group to outline a sustainable, favorable plan. It is being deliberated by the FSA and will likely become law in no time.
5.Enormous Private Sector Support
Japan protects its retail investors and traders by allowing only trustworthy, compliant services to spread, but it also does the same for corporate crypto enthusiasts. Companies that see blockchain and cryptocurrency as integral to their future can assimilate them in many ways and expect that they’ll remain compliant within regulatory guidelines.
Huge corporations like Rakuten, a popular eCommerce hub with a market cap of over $11 billion, have launched their own tokens, exchanges, and more. Monex, the $1.2 billion company based in Japan, just purchased the recently hacked Coincheck for $34 million—a smart buy considering that in the 10 months prior to the purchase (and hack), Coincheck had raked in over $400 million in profits. Alongside large Japanese tech companies like CyberAgent launching their own exchanges, cryptocurrency is rapidly becoming an inseparable part of the country’s corporate scene.
Japan Leads the Way
It remains to be seen if Japan’s dedication to blockchain will pay off to the degree they expect it will. However, the nation is on a roll so far. Much like their resident blockchain enthusiasts, Japan is learning as it goes—an approach ideal for a technology that is likely to look differently tomorrow than it does today.