The Land of the Rising Sun has now become the Land of Cryptocurrencies.
Japan has emerged as the top global player in cryptocurrency market development, according to a report by Japan Times based on data from Coinhills.com. The Japanese currency, the yen, accounted for 56.2% of Bitcoin (BTC) as of January 15. The U.S. dollar was a distant second with 28.4%, while all other currencies accounted for 15.4%.
The yen has quickly overtaken the Chinese yuan because the restrictions imposed by China on crypto trading significantly diminished the status of the former leader among currencies.
Midori Kanemitsu, CFO of Japan’s largest cryptocurrency exchange operator, bitFlyer, commented:
“Effectively, Japan is the first and only country that has a proper legal system regulating cryptocurrency trading. That’s a big deal. Before the law regulating cryptocurrencies, people worried what would happen to their money if an exchange were to go bust.”
Japan’s solid legal system has supported the blockchain industry in establishing credibility among individual investors and thus pushed the country to the top position, Kanemitsu said. In addition, Japanese citizens are familiar with securities trading, particularly foreign exchange, which has also helped propel the growth of cryptocurrency in the region.
“Japanese are the largest foreign exchange investors as well. I guess that Japanese like speculative investments,” Kanemitsu said.
According to the Financial Services Agency, Japan had 16 companies operating cryptocurrency exchanges as of December 26.
Cryptocurrencies have indeed found their way into the mainstream Japanese economy, and a study by financial services group Nomura has concluded that a major change in Bitcoin prices could have a profound impact on national economic growth.
Nomura Instinet’s Yoshiyuki Suimon and Kazuki Miyamoto wrote in the report:
“…The fact that the rise in Bitcoin prices was concentrated in 2017 Q4 could result in the wealth effect materializing in 2018 Q1, and if that is the case, we estimate a potential boost to real GDP growth on an annualized quarter-on-quarter basis of up to about 0.3 percentage points.”