Beginning October, Japanese Bitcoin and cryptocurrency exchanges will be fully surveilled and investigated by local authorities as a part of a larger initiative to create a more regulated and robust Japanese Bitcoin exchange market.
Earlier this month, the Chinese government enforced a nationwide ban on Bitcoin and cryptocurrency exchanges, forcing large-scale cryptocurrency trading platforms including BTCC, OKCoin and Huobi to shut down their services. With the imposition of such an impractical and unnecessarily inefficient ban on exchanges, China further isolated itself from the global Bitcoin industry and market.
Consequently, the majority of traders, entrepreneurs and trading volumes in China have left to neighboring markets. Overnight, after the finalization of the ban and the closure of leading Bitcoin exchanges, the trading volumes of Japan and South Korea surged, as Japan overtook the US to evolve into the largest Bitcoin exchange market in the world. According to various Bitcoin market data providers including CryptoCompare, Japan remains the largest Bitcoin exchange market with 44 percent of the market share.
No ban needed, surveillance sufficient to create licensing program for Bitcoin exchanges
Unlike China, Japan is taking a more responsible approach towards regulating Bitcoin exchanges. Instead of enforcing a nationwide ban on trading platforms, the government intends to surveil and investigate into Bitcoin exchanges for a brief period of time in October. With the information it gathers from its investigation, the Japanese government will release a licensing program to regulate its local Bitcoin exchange market efficiently.
In an interview, an unnamed FSA official told The Japan Times that the focus of the Japanese government is set on fostering its Bitcoin and cryptocurrency markets, not to prevent growth and stall their progress. The FSA official stated, “We pursue both market fostering and regulation enforcement.”
In the upcoming weeks, leading Japanese Bitcoin exchanges including bitFlyer, Japan’s largest Bitcoin exchange by trading volume and other trading platforms such as multi-billion dollar technology conglomerate GMO Group’s Bitcoin exchange ZCoin, would likely be requested to submit daily reports and comply with the investigation of the Japanese government. Upon the completion of the investigation, the Japanese government will launch a licensing program to enhance existing Know Your Customer (KYC) and Anti-Money Laundering (AML) systems.
Not a ban but a positive indicator of growth
The Japanese government’s surveillance and investigation into its Bitcoin and cryptocurrency exchange markets could be considered as a positive indicator of growth.
Earlier this week, Mario Draghi, the President of the ECB, which administers the monetary policy of the 19-countries eurozone, explained that Bitcoin as a peer-to-peer protocol that cannot be prohibited or regulated. But, Draghi also told that it is not in the interest of the ECB to provide regulatory frameworks around Bitcoin trading activities because the market is still premature.
The Japanese government’s interest in providing a licensing program for Bitcoin exchanges and fostering its market demonstrates that the crypto exchange markets, both regional and global, are not premature and developing to be larger at an exponential rate. [The CoinTelegraph]