Japan is one of the most crypto-friendly countries in the world, according to market thought leaders like Kavan Choksi. In 2017, the Japanese government recognized Bitcoin as a legal form of payment, and since then, the country has seen a surge in crypto adoption. Today, Japan is home to some of the world’s largest cryptocurrency exchanges, and Japanese investors play a major role in driving the global crypto market.
Here’s a look at how Japanese investors are helping shape cryptocurrency’s future.
An influx of Japanese investment is one of the key drivers behind Bitcoin’s recent bull run. Since the beginning of 2021, Bitcoin’s price has surged by over 400%, which can be attributed to increased demand from Japanese investors. According to Tokyo-based cryptocurrency exchange bitFlyer, Japanese investors now account for around 30% of all Bitcoin trading activity on its platform.
A Brief Lesson On Crypto Taxation in Japan
In Japan, cryptocurrency is subject to several taxes, including capital gains and consumption taxes. The capital gains tax on crypto is currently set at 20%, and the consumption tax is 8%. However, these taxes only apply to profits earned from trading cryptocurrency and not to crypto holdings simply being held as an investment.
What’s Behind The Surge?
What’s driving this surge in Japanese investment? For many Japanese investors, cryptocurrency is a safe haven asset, similar to gold. With interest rates remaining at historically low levels and the yen’s value remaining volatile, more and more Japanese investors are turning to crypto as a way to protect their wealth. Additionally, the COVID-19 pandemic has made many Japanese investors wary of traditional investments like stocks and real estate, which are riskier in an uncertain economic climate.
In addition to individual investors, institutional investors in Japan are also starting to increase their exposure to cryptocurrency. For example, in 2020, Japanese financial services giant SBI Holdings announced that it would launch its cryptocurrency exchange, SBI VC Trade. The exchange is aimed at institutional investors and allows them to trade Bitcoin, Ethereum, and other major cryptocurrencies with the yen. 2020 also saw Mitsubishi Corporation—one of Japan’s largest conglomerates—invest $6 million in Bitcoin mining firm Northern Data AG. And earlier this year, another Japanese conglomerate, DMM Group, announced plans to launch a crypto mining operation using excess renewable energy from its power plants.
What Will The Future Hold?
The rise of cryptocurrency in Japan is a trend that is likely to continue in the years ahead. As more Japanese investors seek alternative investments, crypto will become an increasingly attractive option. In addition, as institutional investors in Japan increase their crypto exposure, we will likely see even more mainstream adoption of digital currencies in the country. Ultimately, the future of cryptocurrency in Japan is bright, and the country will likely play a major role in shaping the global crypto market.
There’s no doubt that Japan plays a major role in driving the global crypto market. With increasing investment from both individual and institutional investors, Japan is helping shape cryptocurrency’s future.