Bitcoin trading is booming in Japan as yen exchange rates have stabilized, bitcoin has been volatile and the Japanese government has passed virtual currency legislation, according to the Nikkei Asian Review. A total of 430 billion yen in bitcoins were traded in the first half of the year, 50 times more than in the same period in the previous year.
Yuzo Kano, CEO of bitFlyer, Japan’s largest bitcoin exchange, said trading volume has increased at an unforeseen pace. The bitFlyer exchange handles around 40 percent of Japan’s bitcoin trading. The exchange has exceeded 200,000 customers this month, a tenfold gain over a year ago.
Approximately 430 billion yen ($4.25 billion) worth of bitcoin was traded from January to June in Japan, 50 times the level from the prior year. More than 200 million yen in bitcoins traded in June alone, also multiplying by a factor of 50 over the prior year.
One contributing factor is the virtual currency legislation that Japan passed in May that boosted public trust in the digital currency. The legislation required digital currency exchanges to strengthen their record keeping and their financial foundations.
The legislation addresses user protection, including reporting suspicious trading activities to the country’s Financial Services Agency (FSA).
The revised law will see virtual currency exchange operators mandated to register with the Japanese FSA, CCN.com reported. The bill also enables the agency to have the authority to conduct on-site inspections and will require operators to follow know-your-customer (KYC) practices.
The stalemate in yen exchange rates has also contributed to the increase in bitcoin trading. The yen appreciated sharply following the June U.K. referendum on European Union membership, pushing beyond 120 yen to the dollar to around 100 yen. The Japanese currency then fell back to 100 to 105 to the dollar, where it has since remained.
Many traders apparently believe the current exchange range will persist for some time.
Mixed signals from the U.S. economic indicators complicate reading the timing of the next U.S. interest rate, which could impact the yen. The Bank of Japan and the Japanese government are expected to intervene should the yen-to-dollar rate extend into the sub-100 territory.
At the start of the current year, one bitcoin was worth less than 44,000 yen. After it soared past 80,000 yen in mid-June, bitcoin now trades at around 60,000 yen.
Bitcoin’s volatility has proven irresistible for speculators.
Japanese financial institutions have also demonstrated more interest in bitcoin.
Also read: Japan passes bill to regulate bitcoin exchanges
In April, bitFlyer completed a ¥3 billion ($27 million) funding round, the largest funding round ever by a bitcoin and Fintech company in Japan, CCN.com reported.
More recently, Coinbase announced a new investment and partnership with the Bank of Tokyo-Mitsubishi UFJ (BMTU), Japan’s biggest bank, CCN.com reported. The endeavor will see Coinbase look toward expansion efforts in Japan and Asia. Coinbase will raise $10.5 million from Japanese investors today with the aim to launch services in Japan. Currently, Coinbase only has an Asian presence in Singapore.
Featured image from Shutterstock.
Last modified: March 4, 2021 4:50 PM