2019 has been one of the eventful years for the crypto space in Japan. There have been several events this year related to the crypto world in this country. From Bank of Japan issuing a study on Central Bank Digital Currencies to the reporting of blockchain-related advancements in the business of leading financial firms of the country like Marubeni Corporation and Daiwa Securities Group, there are a lot of instances proving that Japan is accelerating like anything in the crypto space.
There have been discussions and arguments over the issue of CBDCs in Japan for a very long time.
CBDC can be considered as the digital currencies just like bitcoin but they would be issued by the regulatory bodies of Japan. Hence, unlikely other cryptocurrencies, they are not decentralized. However, after the issue of CBDCs, they can be used legally for all kinds of payments of the country such as paying bills, transfer money etc. They would resemble the regular fiat currency.
However, the Central bank has been opposing the concept of CBDC for a long time. As per it,
CBDC would severely affect the current financial market of the country. It says that CBDC would lead the interest rate of the country to fall to zero and eventually, the finance system of the country would fell down.
But recently, last month a report was sent to the Central Bank insisting for CBDC. There were several suggestions to use the CBDC such as dividing the digital banking into two parts, one for general public performing day to day transactions using digital coins and other for the large -value transfers. The report has been prepared by highly qualified personalities from the University of Tokyo and the Bank of Japan. Although, the report has not been officially accepted it indicates are there are high possibilities for CBDC in Japan in the upcoming future.
The national financial regulator of Japan, the Financial Services Agency is responsible for monitoring the exchange of digital currencies in the country. As per the legal rules, every digital currency exchange must be registered with this organization. However, last year due to tough supervision of FSA, several major crypto players quit the market of Japan.
However, there is a lot of positive news for the digital world in Japan. The internet giant of the country, Yahoo is planning to launch its own crypto exchange in the second quarter of 2019. Many other big firms such as the largest domestic bank of Japan, Mitsubishi UFJ Financial Group and Money Forward etc. are also planning to open their crypto exchanges in the country.
FSA is continuously improvising its regulation to avoid scams and breaches in the crypto exchange in the country. Its major next step is to identify the unregistered firms that are exchanging in the country.
The current tax rate for trading cryptocurrencies in Japan is near to 55%. There have been voices in the country for reduction of this tax rate. Recently, a business industry association named JANE i.e. Japan Association of New Economy has requested the Financial Services Agency to reduce the present tax rate. This association is lead by the CEO of the largest e-commerce retailer in the country, Rakuten. The group also requested to completely remove the tax for intra-crypto transactions.
The modifications in the tax rate would reduce it to around 20% which is almost the same tax rate that is applied to the regular stock market in the country. If the modifications would be done in the crypto transaction tax rate, it would be really a boon for the crypto investors in the country.
There has been the rise of interest of stable coins and digital coin in the country. The latest update of the emerging of the stable coin is from two huge firms of Japan. Recently, IT giant GMO Internet announced the launch of the yen-backed stable coin called GYEN in the country. Although there is no detailed information regarding this project, this is a good sign for crypto space in the country. Another news about the stable coin is the launch of J-Coin by one of the leading banking firm Mizuho Financial Group. This stable coin, J-Coin aims to act as a middleware between the existing bank account and crypto wallets.
The blockchain technology has been entering in various domains in Japan and that too at a very fast pace. If we talk about banking domains, then various huge banking firms such as the second largest bank of the country, Sumitomo Mitsui Banking Corporation completed a POC using this technology-based Marco Polo trade platform. The second largest securities brokerage of the country, Daiwa Securities Group has also announced for the completion of a blockchain based proof-of-concept. SBI Holding and Mitsubishi UFJ Financial Group are some of the huge banking names who have accepted blockchain to enhance their businesses.
Apart from banking, many IT companies like Itochu which is one of the five largest companies in the country, Line which is the host of the leading messenger application in Japan and Nomura which provides economical solutions in the country are also using this technology.
There are some energy and utilities based firms also who are using the blockchain technologies. Some of the big names in these firms are Marubeni Corporation, leading trading company and Fujitsu, one of the largest IT firms in Japan.
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