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Japan Central Bank Examines Digital Currencies Again

Japan Central Bank Examines Digital Currencies Again

The role of central bank digital currencies (CBDCs) in the present monetary system is being re-examined by the Bank of Japan (BoJ). The central bank summarized the findings in a comprehensive report published after previous negative opinion of CBDCs by the bank last year.

In the said report, BoJ mentioned various approaches to implement a CBDC. Moreover, probable outcomes of each approach have been discussed in detail. The bank has divided possible CBDCs into two categories. One will be accessible to the general public like banknotes, while the other will be limited to large-value settlements only.

The said categorization has been done in accordance with the report that was published in March 2018 by the Bank for International Settlements, which divided CBDCs into wholesale and general purpose ones.

The report’s authors noted that wholesale CBDCs are not expected to bring any new feature to the existing monetary system. Therefore, the focus must be shifted to the general purpose currencies. The major portion of the report deals with general purpose CBDCs. For token-based ones, blockchain and distributed ledger technology can be utilized, stated the report.

Masayoshi Amamiya, deputy governor of BoJ, holds a negative opinion regarding central bank-issued cryptocurrencies. The South Korean central bank also stated that it will not issue any central bank digital currency.

 

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Rakuten May Soon Accept Crypto Payments

Japan’s Amazon-analog Rakuten, in its last earnings report, has announced that it will be releasing new features on its pay mobile app which may supposedly allow its users make use of cryptocurrency transactions through the gateway in the near future.

Rakuten didn’t directly say that it would accept cryptocurrencies, however, it did give a hint that all payment options will be accepted and since it already owns a subsidiary that offers cryptocurrency service, hence the possibility of it accepting crypto payments on its app when the upgraded features are released in March.

Rakuten’s involvement in crypto was established when it acquired local crypto exchange Everybody’s Bitcoin last year and was of the opinion that cryptocurrency-based payments will revolutionize the e-commerce industry.

Cryptocurrency payments on e-commerce platforms are thought to be one of the revolutionary hallmarks of cryptocurrency that may usher it into mainstream usage. Up until recently, only a few stores accepted crypto payments and most of these were sponsored by enthusiasts themselves.

As for mainstream stores, it remains to be known what’s keeping them from accepting cryptocurrency payments. More so, a sample survey showed how an average of 3% of Americans used Bitcoin for purchases. Perhaps it has something to do with volatility and the fact that in most jurisdictions, crypto regulatory status is either uncertain or outright banned. However, for Japanese crypto enthusiasts, the possibility of this development by Rakuten may have a positive impact on the industry.

E-commerce shoppers continue to show enthusiasm towards cryptocurrency adoption, although it might take a while before the industry has fully permeated the e-commerce niche. More so, a recent survey showed that 12.7% of Amazon customers would like to see the marketplace selling cryptocurrency products or services.

 

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Japan Financial Regulator Requested to Reduce Crypto Tax by Economic Alliance

Japan

Japan’s Financial Services Agency (FSA) has been requested by the Association of New Economy (JANE) to reduce the current tax rate for crypto-related income, media reported on 14 February 2019.

In a proposal request, it has been suggested to the FSA to impose progressive taxation on crypto instead of general taxation, noted media report. The initiative was led by Rakuten’s CEO, Hiroshi Mikitani.

According to the said proposal, a progressive tax is currently applied to forex and stock markets in Japan. The tax rate, under progressive taxation scheme, is 20 percent. However, the crypto sector is taxed according to the general taxation system, which is 55 percent. The aim of this request is to bring down the tax rate from 50% to 20% on crypto gains. Moreover, the association has proposed that no tax should be imposed on crypto-to-crypto transactions by FSA.

In addition, JANE appealed to the Japanese regulator to avoid hindering the growth of the crypto sector. It maintained that restrictive regulations on digital assets will likely harm innovation. Furthermore, the association demanded a clarification from FSA regarding the settlement process of initial coin offering, derivative trading and its regulatory scope.

Recently, Rakuten (Japanese version of Amazon) declared that it will revise its corporate structure. The company aims to utilize blockchain technology for setting up a new payments subsidiary system. Moreover, its loyalty branch, Spotlight Inc., will be rebranded to a new firm named as Rakuten Payment. A crypto exchange will also be operated by Rakuten Payment.

On the other hand, FSA recently (12 January) announced that within the next six months, the review process of crypto-related businesses licenses will either be rejected or approved.

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Depreciating Cost of Mining Machines, Bitcoin Price Hit GMO Group

Its latest company report published this week confirmed that the GMO group suffered losses of JPY 1.3 billion (USD 12 million) in 2018, mainly due to a drop in cryptocurrency mining activity.

A company spokesman for the Japanese company which supports internet infrastructure, internet finance, and cryptocurrency mining business, put the down the losses to the declining price of Bitcoin in 2018 along with a depreciation in the cost of mining machines.

The main outcome of the company’s losses has resulted in a rethink in how GMO adjusts its business policy moving forward. A problem in 2018 had been the purchase of expensive mining machines from other manufacturers, which led to decreased profitability. This was due to a delay in procurement of part of the electronic components, which led to the postponement of development and manufacture of mining machines.

The company has now decided to relocate its mining center elsewhere in Japan in order to obtain a cleaner and more financially viable power supply. In December 2018, GMO had indicated that it would be closing down its mining operations with predicted losses of JPY 35.5 billion due to quitting the development, manufacture, and sales of mining equipment.

GMO said:

“The electricity cost in the new location, which is confidential, is less than half of that in Northern Europe, which is 7-8 cents per kWh including running costs. We believe the relocation will impact our earnings this summer.”

With further losses announced this week, it is unclear exactly how GMO will progress in the cryptocurrency space moving forward into the long term.

 

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FSA Reports Drop in Crypto Inquiries, Is Japan Losing Interest?

FSA Reports Drop in Crypto Inquiries, Is Japan Losing Interest?

In a report from the Financial Services Agency (FSA) last week, the number of inquiries about cryptocurrencies received by the Japanese financial regulator during the period of Q4 of 2018 had declined. Could Japan citizens be losing interest in crypto?

According to the report published on 8 February, in Q3, the FSA had received as many as 1231 inquiries related to cryptocurrencies from citizens, but this figure had dropped to 788, a 36% drop in Q4. Overall, the year 2018 saw a drop from 3,559 during Q1 to 788 in Q4 of the same year – an approximate 78% drop. Further signs may indicate a further decline may be on the horizon.

The year 2018 arguably was an active year in crypto for Japan, with the year end swamping the regulator with exchange applications after the FSA had granted the Japan Virtual Currency Exchange Association (JVCEA) the power to oversee self-regulation within the industry.

Strides had included a regulatory framework for ICOs, systems designed to monitor tax reporting and evasion, the appointment of a pro-crypto minister who would oversee all things crypto and blockchain which provided a positive outlook for crypto enthusiasts in the region. There were talks about a Japan instituted Bitcoin exchange-traded funds – although this was later dismissed by the FSA as rumors.

Although, unlike some other nations, Japan has had a more differing opinion about state-issued central bank digital currencies (CBDC), saying that they are unlikely to improve the existing monetary systems and therefore, the Bank of Japan itself had no plan to issue digital currencies.

Regardless, Japan is considered to be one of the progressively active countries in terms of crypto regulatory initiatives on the Asian continent. However, one baffling question that remains unanswered is why the inquiries about crypto-related issued had declined over the course of 2018. Are Japanese crypto holders and enthusiasts getting tired of crypto, or are they better off without the oversight of the regulator?

At the start of the year 2018, inquiries were higher even with Bitcoin price declining from its all-time high of December 2017, compared to when the price almost seemed to bottom out at the end of the year. Although, Bitcoin trade volume data from peer-to-peer trading platform LocalBitcoins.com as revealed by Coin Dance had peaked in one of the weeks in October 2018, reaching its highest point for the year and then slowly declined.

Perhaps the drop in inquiries may have had something to do with the security challenges plaguing the Asian crypto market which accounted for a sizeable share in the USD 1.7 billion worth of cryptos reportedly stolen in 2018. This included exchange hacks, exit scams, Ponzi schemes, and identity thefts.

One thing is certain, the government of Japan is striving for a more harmonized environment for both crypto ventures and investors, and most certainly not at the detriment of the financial system and its policies. It has also provided a regulatory sandbox for a more controlled environment for fintech products.

A beneficiary of the sandbox project is a recently approved trial for a yen-backed stablecoin settlement to be undertaken by Digital Garage. With the bottleneck-like regulatory framework designed to protect investors interest, even US-based crypto exchange Coinbase applauds the regulator’s effort for setting up such a system in place.

 

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Blockchain Defender Reports Distrust In Crypto Industry Is Still An Issue

Blockchain Defender Reports Distrust In Crypto Industry Is Still An Issue

A recent Blockchain Defender report claims that despite cryptocurrencies increasing market capitalization there is still a prevailing lack of public trust in the industry as a whole.

Despite the market cap hitting nearly $800 billion in January 2018, the report cited negative sentiments in many areas. The report essentially focused on market sentiments, trends, capitalization and comparisons with traditional exchanges in order to get an overall picture of how the industry is perceived.

To analyze market sentiment the report called upon search results in each country’s native language, finding that the most negative search results were found in the United States, followed by Germany, the United Arab Emirates and Japan. The actual sources of negative content were found to include social media platforms, blogs, crypto industry news websites, discussion forums, crypto review websites, and crypto company directories and websites.

The report also found that cryptocurrency exchanges had far less control over online sentiment than traditional exchanges. This was due to the level of ownership of the content with traditional exchanges own 34.38% of content compared to only 17.75% by cryptocurrency exchanges.

Blockchain Defender examined the data for a cryptocurrency which had been hacked last year with an examination of its popularity both before and after the hack and surmised that globally, the digital currency experienced an increase in negative content as a result of the hack and a drop in positive sentiments.

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Report: Japan, South Korea Playground for Bad Actors in 2018

Report: Japan, South Korea Playground for Bad Actors in 2018

The latest CipherTrace report into cybercrime has revealed that much of the USD 1.7 billion worth of cryptocurrency stolen in 2018 came from the Asian Bitcoin arena of Japan and South Korea.

In the “Cryptocurrency Anti-Money Laundering Report, 2018 Q4”, it is stated that out of the funds either stolen through hack or scams, about USD 950 million came from cyber attacks on Bitcoin exchanges. The remainder came from a range of criminal activity such as ICO exit scams, Ponzi schemes, and mobile phone sim swaps.

Last year started badly in Asia, with Tokyo-based Coincheck’s USD 500 million hack, followed by Bithumb and Zaif then falling foul to hacking. With numbers on the increase, representing a seven-times hike over a period of two years since 2016, the report expresses the need for tighter regulation. Investors in Vietnam also lost about USD 35 million to the Sky Mining scam in 2018, adding to Asia’s woes.

Both South Korea and Japan have since made a concerted effort to tighten security, with both countries now introducing self-regulation. Japan’s cryptocurrency industry self-regulators, the Japan Virtual Currency Exchange Association (JVCEA), was approved by the national Financial Services Agency (FSA) to be officially recognized in its regulatory position late in 2018. This was a direct result of the Coincheck hack of the same year.

South Korea, after its CoinRail hack in June last year, has joined other Asian nations who are currently in the process of regulating their own financial banking strategies regarding blockchain and cryptocurrency in order to protect exchange clients.

The report, in indicating the need for closer regulation, suggested that bone fide operators need to be able to operate untarnished by “bad actors” who are not part of the legitimate cryptocurrency community. The report stated:

“These bad actors are clearly flocking to jurisdictions with weak AML and Know Your Customer (KYC) regimes, because in our Q3 report we published the results of research showing 97% of criminal Bitcoin flows into unregulated cryptocurrency exchanges.”

 

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Can Japan Make Bitcoin Splash at Tokyo Olympics?

Can Japan Make Bitcoin Splash at Tokyo Olympics?

Those promoting the adoption of Bitcoin and other cryptocurrencies as a form of payment in Japan will be hoping that next year’s Games of the XXXII Olympiad (Tokyo Olympics) will bring out the crypto spenders.

The Japanese are traditionally a nation of cash spenders, unlike China and South Korea who have taken more to credit and debit cards for their daily needs. Consequently, ATMs abound in Japan, some 20,000 of them at last count, all dispensing Japanese yen, although local crypto advocates would love to boast such numbers dispersing Bitcoin and other cryptocurrencies to the general public.

Next year’s summer Olympics has been seen as an opportunity to decrease the cash imprint, in line with Prime Minister Shinzo Abe’s aim for 40% of payments to be cashless in the county by 2025. The hundreds of thousands of visitors attending the summer Olympics in 2020 has become a tantalizing prospect for some in Japan’s crypto space.

One of these is American internet company Akamai who has teamed up with Japan’s largest bank Mitsubishi UFJ Financial Group (MUFG) to build a blockchain-based consumer payment network to be used during the main event next year. Tests, according to the companies, have yielded speedy results with more than a million transactions per second, with each transaction confirmed in two seconds or less.

MUFG is moving towards closer towards cryptocurrency, albeit having taken some time to consider the step, and along with other Japanese companies has been experimenting with DLT for some time. Two other companies, Mizuho Financial Group, and SBI Holdings are both in the process of producing their own digital coins.

With Ripple lining up to become the official cryptocurrency of 2020 Olympic Games after last year’s petition which gained 14, 115 supporters, the summer Olympics is proving that it could become a crypto battleground for some of the major tokens as 2020 approaches.

 

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Japan Approves Trial for Yen-Backed Stablecoin Settlement

Japan Approves Trial for Yen-Backed Stablecoin Settlement

A subsidiary of Japanese internet group Digital Garage has been approved for the first blockchain finance project authorized by the government’s new regulatory sandbox. Crypto Garage will test the issuance of a Japanese yen-backed stablecoin using Blockstream, a Bitcoin infrastructure startup.

Excited to announce @CryptoGarageInc, a Joint Venture between @DigitalGarage, Tokyo Tanshi & @Blockstream, developing #SETTLENET & $JPY #stablecoin for #LiquidNetwork. Alongside the JV, @Blockstream took an additional $10MM strategic investment from DG. 🌊 https://t.co/mOvMsogMOX pic.twitter.com/j82dusL2gO

— Blockstream (@Blockstream) January 21, 2019

A new platform called SettleNet has been launched by Crypto Garage with development aid from Blockstream to conduct the trials, which utilizes the latter’s inter-exchange settlement network Liquid. Settlenet will be used both to test the issuance of the stablecoin as well as conduct payment settlements between it and alternative cryptocurrency assets.

The proof-of-concept trial has been proposed to last the length of one year and will involve only Japanese licensed cryptocurrency exchanges with trades between the yen-backed stablecoin and Blockstream’s Bitcoin-pegged token, Liquid Bitcoin (L-BTC), taking place with restricted volumes for now.

According to Crypto Garage, the network will allow atomic swaps between the two digital currencies for instant trades, creating ”rapid, secure and confidential transfer of the crypto assets while eradicating counterparty risk”.

Digital Garage has been working alongside Blockstream since November 2017 to develop blockchain financial solutions in Japan. The Cabinet Secretariat of Japan is responsible for managing this trial.

 

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Bitcoin ETF Approval Would Give EU Legislators More Confidence Over Crypto

In a change of stance on cryptocurrency adoption by EU legislators, who until now have been mainly fence-sitting on the subject, are indicating that ETF acceptances may create more positive interest towards easing regulation.

European legislators have recently stated that a Bitcoin ETF green light by the SEC could ease the current pressure felt by cryptocurrencies across Europe.

A recent report by the EU’s financial advisory group suggested that there was a continued threat to investors trading in cryptocurrencies arguing that, “These issues are not unique to crypto assets trading platforms; they may be exacerbated in the case of crypto-assets because of their high price volatility and often low liquidity.”

In an attempt to regulate cryptocurrencies and provide more safeguards, EU legislators are increasingly looking to organizations such as Gemini who have taken to ETF, despite their own problems in getting them recognized by the SEC, due to the body’s continual reluctance to endorse cryptocurrencies. Gemini’s joint CEO Cameron Winklevoss commented about their own problems with regulation:

“We understand the commission’s concerns. We’ve heard them loud and clear and they are basically calling for more market surveillance and protections in the marketplace to avoid, prevent against manipulative behaviour and stuff like that. So, Gemini has built a market surveillance team.”

CSO of CoinShares, Meltem Demirors, has a more negative approach to the prospect of Bitcoin ETFs being accepted by the SEC due to the current political stalemate in Washington, arguing:

“….in this current sort of stalemate where you have the Democratic House, and the Republican Senate, you see some clashing, there are very different views on financial innovation and what should happen, but I think right now there is no upside to approving an ETF.”

The Winklevoss Brothers have called for the introduction of a Virtual Commodity Association, a self-regulatory organization for the cryptocurrency industry in the United States, similar to the Japanese Virtual Currency Exchange Association (JVCEA).

The JVCEA was founded on April 2018 when 16 crypto exchanges joined hands with the ultimate aim of providing self-regulatory standards for the industry-wide investors. Later in October, it was officially given self-regulatory status by Japan’s financial regulator to supervise the crypto sector.

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