Category Archives: Japan Bitcoin News

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Japanese Agency Claims 170% Increase in Crypto-related Inquiries in 2018

Japanese Agency Claims 170% Increase in Crypto-related Inquiries in 2018

Japanese premier citizen complaint agency Consumer Affairs Agency (CAA) has reported that 2018 saw a sizeable 170% increase in queries relating to cryptocurrencies. The uptick is one of the highest in the industry in recent years signals increasing trend towards cryptocurrency investment among the general public.

The CAA while working under the Japanese Cabinet Office is responsible for feedback and daily affairs of the government. The CAA provides credible data to the parliament on consumer protection and the general sector for analysis and policymaking. Data from last year shows that over 3657 inquiries were made by customers throughout the calendar year. The data shows a 1.7 times increase from 2017 which is half the increase witnessed from 2016 to 2017 (3.5 times).

Consistent growth has been witnessed in the sector since 2014 according to data records from CAA. The most common queries relate to crypto exchanges and their credibility, refunds and withdrawal requests and complaints, security-related matters, login issues and difficulties with vendors accepting cryptocurrencies that are not responding to buyers. The data from the Financial Services Agency (FSA) shows that crypto related inquiries decreased in the last quarter of 2018 which shows a relationship with the healthiness of the Bitcoin price index, considering BTC touched lowest levels at that time.

Japan continues to be one of the most progressive countries when it comes to adopting cryptocurrencies and there is a lot of awareness among the public regarding the sector. There is also a perception of open-mindedness when it comes to the Japanese public.

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Japan Regulator Denies ETF Rumors

Japan

Japan regulator Financial Services Agency (FSA) has denied rumors that it is considering the option of Bitcoin exchange-traded funds (ETFs).

The denial comes after the report by Bloomberg from an anonymous source that claims FSA was mulling on the acceptance of Bitcoin ETFs. The agency has categorically denied that fact, saying, “At this moment, we are not exploring an approval of ETFs based on crypto assets.”

The FSA was also reported to be considering the creation of a new legal category for cryptocurrencies, called crypto assets. Through the single name change from currency to assets, the report said the government “hopes that traders will no longer purchase [cryptocurrencies] believing that they are legal tender recognized by the government”.

Japan is one the most progressive countries when it comes to cryptocurrency. Yet, the Asian nation is ensuring that there is no misleading information or perception on the nature of cryptocurrencies. The FSA is very active in this regard and has made a number of regulations and given rulings. In October last year, it had declared that stable coins were not a form of cryptocurrencies, but just a form of prepaid payment instruments. This definition put stable coins in a whole different category and standard payment instrument applied to them.

In December, the agency also set out a new set of rules for companies wishing to run and ICO, in order to protect the rights of investors. This would require proper registration and approval from the regulator first.

The country also has a crypto exchange regulating body, the Japanese Virtual Currency Exchange Association (JVCA). It is primarily a self-regulating group that sets standards for industry-wide investors.

 

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Japan May Regulate Unregistered Crypto Investments

Japan

The Financial Service Agency (FSA) of Japan is reportedly looking to crack down on unregistered crypto investment firms and bring them under the Financial Instruments and Exchange Act. Tentative dates for the aforementioned action have not been announced yet.

It stems from a legal loophole which allows unregistered investment firms to collect funds in cryptocurrencies rather than cash, an oversight the FSA is keen to rectify.

The issue became a highlight due to the increased number of crypto pyramid schemes being unearthed in Japan. Tokyo Police in November arrested eight men over the charges of collecting of JPY 7.8 billion (USD 69 million) in cryptocurrency using such schemes. A major chunk of the funds collected was in Bitcoin, whereas only JPY 500 million (USD 4.4 million) was collected in the form of cash. Officials claimed that the scam would not have come to their notice had the culprits only used cryptocurrency.

The FSA has kept a close eye on crypto-related businesses and firms since the collapse of the Mt Gox exchange back in 2014. The agency regulated crypto exchanges by introducing a licensing scheme and conducting inspections of the exchanges for their security and compliance with anti-money laundering laws.

Recently, reports surfaced that the FSA was looking to allow crypto exchange-traded funds (ETFs). However, over the concerns of enhanced speculations, it has now refused to allow the trading of crypto derivatives on financial exchanges.

 

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5 New Crypto Exchanges Join Japanese Self Regulatory Body

5 New Crypto Exchanges Join Japanese Self Regulatory Body

The Japanese Virtual Currency Exchange Association (JVCEA) has recently welcomed five new members into the fold.

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.

As a result of a USD 534 million hack of a crypto exchange (Coincheck) back in January 2018, the body issued comprehensive regulatory guidelines to mitigate any future hacks. These regulations banned insider trading and prohibited the trading of privacy-based coins.

The new companies joining JVCEA are: Coinage Corporation, Everyone’s Bitcoin, LVC Corporation, Lastroots Inc. and Coincheck. These companies are classified as Type II by the body, which means that these companies are still in the process of obtaining the virtual currency trader registration.

Reportedly, JVCEA is only recruiting Type II members at the moment. However, it is planning to add a classification for the wallet creators in the near future as well. On the other hand, the exchange association claimed that it is looking to put a margin trading limit along with the maximum restrictions to be placed by the exchanges on their clients’ trading.

 

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Bank of Japan Declares State-Issued Cryptocurrencies Are Not Effective Economic Tools

Japanese Central Bank’s current deputy governor Masayoshi Amamiya has once again voiced opposition towards Central Bank issued Cryptocurrencies (CBDCs) in a recent interview with the New York Times.

During a meeting in Nagoya, Japan, Amamiya expressed his doubts about the CBDCs and said that such currencies are unlikely to improve the existing monetary systems and therefore, Bank of Japan itself has no plan to issue digital currencies.

While some experts have considered the CBDCs a tool to control the economy once the interest rate falls to zero, Amamiya has questioned their theory. He is of the opinion that in order for the concept to work, fiat money would have to be eliminated from the financial system in the first place. If the fiat money is not discontinued, then the CBDC will continue to be converted into cash for various reasons and thus the CBDC will be under pressure.

Amamiya said:

“In order for central banks to overcome the zero lower bound on nominal interest rates, they would need to get rid of cash from society.”

While a cashless future is touted by many as the future of payments around the world, according to Amamiya, even a progressive country like Japan is not ready for the elimination of fiat currency as cash is still a popular means of payment. He also believes that the shift from fiat currencies to CBDCs is quite a big hurdle to overcome for the central bank because crypto assets are still not considered as a stable means of payment.

While Amamiya may be negating reports of state cryptocurrencies, it is worth mentioning that Japan is one of the most progressive countries in the world regarding technology and cryptocurrency adoption. If CBDCs are eventually proved to be stable, then it is countries like Japan that are likely to adopt them first.

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Japanese Crypto Association Tightens Self-Regulatory Measures

A Japanese self-regulatory body of cryptocurrency exchanges has tightened laws on customer asset management, according to Japan Times. According to sources within the the Japanese Virtual Currency Exchange Association (JVCEA), the group consisting of some of the largest cryptocurrency exchanges operating in the country has established a limit on the amount of digital currencies and tokens that can be managed online to deter future hacking attempts. The exchange association was established in April in an attempt to self-regulate the cryptocurrency exchange landscape.

The move comes after yet another cryptocurrency exchange was hacked in Japan last week. Zaif, the affected exchange lost more than USD 59.7 million worth of cryptocurrencies because of this hack and the tokens were reportedly stored in its hot wallet.

The JVCEA is attempting to limit the risk of hacks by pushing exchanges to keep most of their coins offline in cold storage wallets, with only up to 10-20% of the total customer holdings to be allowed in the hot wallet from which transactions can be made automatically.

The move is swift and pre-emptive because any news of the financial watchdog Financial Services Agency (FSA) will affect all of these exchanges and their operations. The JVCEA believes that self-regulation is important for the future because government interference negatively affects the cryptocurrency circles. It remains to be seen how the FSA will react due to the recent hacking episode in the Asian country, although it has made apparent its frustrations in the case of Zaif.

Japan is one of the most progressive countries in adopting cryptocurrencies and blockchain technology but it also has been the target of some of the biggest hacks in history with the USD 523 million worth of NEM tokens being stolen from CoinCheck exchange earlier this year.

 

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Japan to Upgrade Crypto and Exchange Legislation

In a recent report, local Japanese media outlet Sankei has indicated that the Japanese Financial Services Agency (FSA) is to change the legal foundations on which cryptocurrency regulations are based in the country.

Classification switch

The report made on3  July states that the Japanese financial watchdog is considering to regulate cryptocurrency exchanges under the Financial Instruments and Exchange Act (FIEA), which is a switch from the Payment Services Act.

Under the new classification, exchanges would be required to manage private and institutional assets separately.

According to the report made by Sankei, the law (FIEA) “obliges securities companies and others to manage customer funds and securities (stocks, etc.) separately from corporate assets”. It also establishes “a strict investor protection system, such as forbidding insider trading of stocks”.

Customer protection

The cause for the move came after a scandal involving NEM coin in January 2018; at this time an equivalent to roughly JPY 58 billion (USD 530 million) was hacked from one of the largest cryptocurrency exchanges in Japan, Coincheck.

This led to the Japanese government and the FSA recognizing that customer asset protections were of utmost importance and, furthermore, the previous legislation that was enacted in April 2017 was insufficient.

The April 2017 legislation was huge news from Japan; it saw Bitcoin and other virtual currencies being officially accepted as legitimate means of payment. It also meant that cryptocurrency exchange operators with a domestic presence were mandated to register with the FSA and gain a license should they wish to resume business.

Now, just over a year later and after a difficult lesson, the inefficiencies of the previous legislation have been acknowledged and now a more robust set of investor protections are required.

Currently, cryptocurrencies are legally considered the same as electronic money; however, should the FSA move the regulatory basis to FEIA, cryptocurrencies will be treated as a financial product. This creates the possibility of trading cryptocurrency derivatives like futures and exchange-traded funds.

Moving forward

Bitcoin News has reported on multiple occasions that Japan is somewhat a speculative hotspot for the future of cryptocurrencies. This year has seen the pro-crypto nation wrestle with crypto-scepticism several times.

In June, Japan’s self-regulatory Virtual Currency Exchange Association (JVCEA), was to announce fresh laws regarding insider trading by banning private coins. However, cryptocurrency exchanges weren’t particularly pleased even going as far as to say that the rules were “as tough as the Financial Instruments and Exchange Act”.

Though in hindsight, this quote appears to overlook the NEM scandal. Furthermore, JVCEA has been offering suggestions to the FSA regarding mandatory storage protocols for crypto exchanges.

 

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