Even as other Asian nations pull back, the world’s two largest cryptocurrency thefts haven’t turned Tokyo off the blockchain phenomenon
T he two largest cryptocurrency heists in the world with losses totalling almost a billion dollars at exchanges in Tokyo, and a cultural tendency towards conservatism, seem to have barely dampened Japan’s enthusiasm for bitcoin and other cryptocurrencies.
Decades of stagnation since the bursting of the bubble economy at the dawn of the 1990s has left the government grasping for growth drivers. While Prime Minister Shinzo Abe ’s “Abenomics” brought some relief, the shrinking population and tax base, combined with massive national debt, mean the longer-term prognosis remains precarious. Cryptocurrencies and the related technologies offer potential for growth, tax income, and a leadership niche for Japan as other regional economies such as China and South Korea push back against them.
China has banned cryptocurrency exchanges and almost all related activities, while South Korea has banned anonymous transactions, one of the major attractions of cryptocurrencies, but stopped short of the outright prohibition it originally appeared to be threatening. The Japanese authorities, in contrast, have been far more welcoming.
“There are estimates that tax revenue from the cryptocurrency business, including capital gains taxes from individual investors and from corporations, could amount to 1 trillion yen (US$9.2 billion), though that is very speculative at this stage,” said Takashi Shiono, an economist at Credit Suisse in Tokyo.
In an unexpected departure from its normally staid bureaucracy, Japan in April last year became the first major economy to officially recognise cryptocurrencies as payment methods and assets.
“Regulators in Japan are usually conservative and not first movers,” said Ken Kawai, partner at law firm Anderson Mori & Tomotsune and adviser to finance-tech start-ups. “The government wants to facilitate fintech through cryptocurrency and blockchain technology.”
The regulators’ knowledge of the new and rapidly shifting sector is limited, according to Kawai, but they appear determined to let it flourish.
