The State of Cryptocurrencies in Japan

Bitcoin took the world by storm when an anonymous online user named Satoshi Nakamoto published the whitepaper back in 2008, and Japan, a state known for its cutting edge technological innovation, is one of the early adopters of cryptocurrencies. It is where the headquarters of Bitcoin.com and Mt. Gox, the now defunct crypto exchange, are located.


The Land of the Rising Sun underwent changes in its state structure, with the appointment of a prominent pro-blockchain politician Takuya Hirai as Minister of Science, Technology, and IT. This is expected to further benefit the development of this technology in the country.

In retrospect, Japanese traders were considered extremely conservative and cautious. They were more inclined to invest in low-yield risk-free assets like national bond, but recently, a study by Deutsche Bank revealed that a huge number of crypto traders are now ceasing to be cautious. They are now choosing risky high-yield investment, “retail ininvestors are shifting from leveraged foreign-exchange trading to leveraged cryptocurrency trading”, says the Deutsche bank AG analysts.

The Financial Services Agency of Japan (FSA) released the first in the world statistical report on domestic cryptocurrency trading over the past financial year. According to the report, the country has around 3.5 million crypto crypto investors who trade in the volume of $97 billion per year. The majority of these traders are 30-year-old businessmen, based on the data collected from seventeen crypto exchanges.

Japan dominated the worldwide trading of Bitcoin in mid-2018, with the BTC/JPY pair accounting for almost 60% of all Bitcoin operations, according to CryptoCompare. This figure has dropped to seven percent recently, which is eight times lower than it used to be.

The annual trading volume of BTC pairs has grown from $22 million to $97 billion in Japan alone since 2014. Meanwhile, Bitcoin futures and other forms of investment with Bitcoin trading as the main asset, has increased from $2 million to whopping $543 billion for the same timeline.

Although Bitcoin remains popular in the country, diversification is also a common practice. The portfolio of the average Japanese trader consists of BTC, BCH, XRP, ETH, and EOS.

A second tragedy occurred last January 2018. Coincheck, one of the largest cryptocurrency exchanges in the country, was hacked resulting in a loss of 523 million NEM coins worth approximately $534 million. The culprits have managed to steal the private key for the hot wallet where NEM coins were stored, allowing them to loot the funds. The total damage cost to the worldwide crypto economy amounted to more than $1 billion.

From that moment, the government started getting involved and crypto regulation began. The law on cryptocurrency exchanges was enforced. It was intended to protect consumers from fraudulent transactions and help them to distinguish between safe and untrustworthy exchanges.

According to the law, all crypto exchanges need to go through a licensing procedure with the FSA by September 2017. They imposed operational requirements for exchanges, including high standards for cybersecurity, segregation of customer accounts, identity verification, etc.

Legalization triggered an increase in the popularity of blockchain technology in the country.

Cryptocurrenies are talked about on popular TV channels and in major media outlets. Promising crypto startups are popping everywhere and ordinary people can send and accept cross-border transactions without fear of being penalized by the state.

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