Japan is now the largest cryptocurrency trading hub by volume. Yen trading volumes have toppled China's market dominance after the recent ban on exchange activity by Chinese authorities. Neighbouring Japan and South Korean markets are the most prominent beneficiaries of prohibitions on the mainland. Traders from the mainland are crossing over to Japanese exchanges to bypass the blockade on cryptocurrency trading activity.

The price of Bitcoin is now at an all-time high over $5000. Trading volumes on cryptocompare show the Yen (JPY) makes up 57.81% of total global bitcoin volumes; 2 times the volumes in US dollars at 27.20%. 

As the first country to pass official legislation on cryptocurrency like Bitcoin, Japan is by far ahead of its neighbors. Cryptocurrency activities are regulated by the Japanese Financial Services Authority under the Virtual Currency Payment Service Act passed in April. 2 weeks ago, 11 exchanges on the island received licenses to conduct business formally, 17 more are waiting in line. 

China has been the biggest loser. For a long time, the nation of 1.2 billion people contributed the highest volumes, up to 90% trading in Yuan in 2013. But China's share of trading volume has waned since authorities have gotten more involved in the business of exchanges. September’s all out ban forced exchanges to close up shop until further notice by a coalition of 7 government agencies.

Japan, South Korea, and Hong Kong are happy to onboard traders fleeing China's aggressive tone.

Besides speculative trading, Japan is heavily investing in digital currencies through new products, mining and private blockchain implementations. 

Banks have identified the upcoming 2020 Tokyo Olympics as an opportunity to roll out massive digital payments.  The country's largest banks proposed J-coin, a consortium digital currency led by Mizuho Financial Group. Up to 70% of transaction values in Japan are carried out in cash, an unhealthy dependence that banks and regulators are keen to nip in the bud.

Cryptocurrency mining is also on the agenda for tech companies and financial industry players. Japanese enterprises view bitcoin mining as a lucrative source of low-cost bitcoins. 2 firms - GMO and - announced future mining operations in addition to their existing exchange business.

Coincheck, one of Japan's licensed exchanges, exhibited the first ever interest paying bitcoin accounts in May this year. Coincheck lending offers customers 5% interest per year on deposits, with flexible tiers for shorter period deposits.

The combined approach by Japan is yielding dividends for its trading activity.