Bitcoin and Solar Energy Fuel Investment in Japan: Expert Take

Bitcoin and Solar Energy Fuel Investment in Japan: Expert Take

The Land of The Rising Sun has a ravenous appetite for cryptocurrency.

In our Expert Takes, opinion leaders from inside and outside the crypto industry express their views, share their experience and give professional advice. Expert Takes cover everything from Blockchain technology and ICO funding to taxation, regulation, and cryptocurrency adoption by different sectors of the economy.

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The global financial crisis of 2007/2008 wreaked havoc in the world economy and resulted in the decline in consumer wealth, widespread real estate foreclosures, evictions, business bankruptcies, prolonged unemployment and a worldwide downturn in economic activity.  But not everything related to the crisis was negative. As poor banking decisions and practices faced a rude awakening by coming to a crashing halt, this allowed for new ideas to emerge, garner attention and be put in to use, especially in Japan, the Land of the Rising Sun.

As the credit crisis was in full force, Japan passed its Basic Space Law, which established Space Solar Power – the concept of collecting solar power in outer space and distributing it to Earth via satellites – as a national goal with the Japanese Space Exploration Agency. On January 9 2009, a new triple-entry accounting ledger system and the first cryptocurrency Bitcoin made its world debut by the programmer using the pseudonym Satoshi Nakamoto.

Nine years after Bitcoin launched, the economic, social and political implications of the crisis are still being felt around the world. Globally, treasury departments continue to face funding deficits with no simple resolution in sight, and the ensuing significant increases in government debt have produced several sovereign debt crises. Ultra-low interest rates from central banks trying to combat deflation have left investors scratching their heads for places to find returns on their cash.

These economic conditions led to a heightened interest in Bitcoin as an alternative investment class, since correlation with other asset classes is virtually nil, a perfect diversifier. Japan currently ranks as the largest Bitcoin market with a share of over 61 percent of global trading volume and 2.7 percent of the population holds BTC.

Softbank Group CEO Masayoshi Son, Japan's wealthiest citizen – who is changing startup technology investing with his large checkbook, upending Silicon Valley finance – refers to technological developments as the ‘‘disruptive, foundational technologies that are building the infrastructure for tomorrow.’’ In 2017 Masayoshi Son, backed by investors who give him on average $1 bln per minute, launched a $100 bln technology-focused “SoftBank Vision Fund” in partnership with tech companies Apple, Qualcomm, Foxconn, and Sharp. And because investing in BTC is considered halal, investors in the fund also include Saudi Arabia’s Public Investment Fund and Abu Dhabi’s Mubadala Investment Company. More foreign country wealth funds are eager to gain access to shares and Initial Coin Offerings (ICO) in tech companies, and are pushing for a second SoftBank Vision Fund, which plans to raise about $880 bln.

Masayoshi Son believes that with improvements both in Internet connectedness and solar power utilization, there will continue to be more global demand for digital assets. As a result, he has made investments in low earth orbit satellite company OneWeb and in solar power businesses all around the world.   

Bitcoin Exchanges

Japan has a ravenous appetite for cryptocurrencies. The first Bitcoin exchange – Bitcoin Market – was established there on February 6 2010, when BTC traded for $0.30. However the exchange was shut down six months later after being scammed. In the aftermath, Japanese Mt. Gox quickly rose to prominence during the same year but met its end four years later after being hacked. This was the largest heist of a BTC exchange at the time, which has been recently superseded by the $530 mln hack of an unregistered exchange Coincheck (Japan). Coincheck is not alone, as crypto-related cybercrime is on the rise, with users and exchanges struggling to keep up with hackers and the constantly evolving methods they employ to steal money and information.

So Saito, partner at Japanese law firm So-Law, explains that “The first BTC regulations in Japan were proposed after the Mt. Gox hack, when the Banking Act and the Act on the Prevention of Transfer of Criminal Proceeds was amended, to prohibit banks and securities companies from dealing in BTC for customer accounts without registration, but allowing for proprietary trading in Bitcoin. These laws came into effect on April 1 2017, along with the Payment Services Act recognizing cryptocurrencies as a means of payment, granting them the same legal status as any other currency. So far the Financial Services Agency (FSA) of Japan has granted licenses to sixteen cryptocurrency exchanges.”

After history’s biggest Coincheck hack, the FSA stepped up its efforts to investigate Bitcoin exchanges, as well as Bitcoin’s illicit use in money laundering transactions. The FSA is also pushing for the merger of two business groups  –  the Japan Blockchain Association and the Japan Cryptocurrency Business Association – to establish a general incorporated association under the revised Payment Services Act in order to create a regulatory framework applicable to the crypto industry.

This is important as regulations have allowed SoftBank Investment, Sumitomo Mitsui Banking Corporation, Mizuho Financial Group Inc., and Dai-ichi Life Insurance Company to continue to invest in Bitcoin exchanges to the point of making Japan the top Bitcoin Exchange market in the world, beating out both China and the US.


The ICO market in Japan is on fire. Taizo Son, Masayoshi Son’s younger brother and founder and CEO of venture capital firm Mistletoe, predicts that ICOs, which democratize the fundraising process, will come to dominate start-up fundraising.

Currently, no laws are governing ICOs but on October 27 2017, the FSA published a statement clarifying its position on ICOs:

“ICOs may fall within the scope of the Payment Services Act and/or Financial Instruments and Exchange Act depending on how they are structured”.

In February the FSA warned an unregistered foreign ICO agency whose activities could cause investors to incur losses. Japan’s Ministry of Finance also warned an investment firm and a questionable ICO.

Cryptocurrency Taxation

When Japan lifted its 8 percent national consumption tax on cryptocurrency sales in July 2017, it kick-started their across-the-board meteoric price rise. But the non-taxable nature of cryptocurrency transactions turned out to be short-lived. On September 6 2017, the National Tax Agency (Kokuzeichou) declared that profits from using cryptocurrencies were subject to individual income tax, classified as “miscellaneous income”, except for cases arising in association with activities that generate business income, such as digital currency mining, or actively trading. Miners can subtract mining overheads like facilities, power consumption, etc. from their final profit.

The top federal tax rate applicable to individual taxpayers in Japan for 2017 is 39.6 percent higher than in the US. Unlike winnings on stocks and foreign currencies, which are taxed around 20 percent, Japan’s levy on profits from cryptocurrency runs from 15 percent to 45 percent for investors who receive annual remuneration over  ¥20,000,000 ($176,500) per year and miscellaneous income above ¥200,000 ($1,765). A further 10% of municipal taxes are added at every income level.

In essence this tax season, all users of cryptocurrencies will need to adopt the kind of meticulous record-keeping and price-tracking measures currently seen in the US where cryptocurrency profits will be calculated at the time of conversion into JPY (¥) and then declared in annual tax filings due between Feb.16 and March 15 2018.

The views and interpretations in this article are those of the author and do not necessarily represent the views of Cointelegraph.

Selva Ozelli, Esq., CPA is an international tax attorney and CPA who frequently writes about tax, legal and accounting issues for TaxNotes, Bloomberg BNA, other publications and the OECD.

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Dubai To Release Blockchain-Based System To Track Vehicle Lifecycles

Dubai To Release Blockchain-Based System To Track Vehicle Lifecycles

Dubai’s Roads and Transport Authority has announced that it will launch a Blockchain-based initiative for tracking vehicles’ lifecycle for their customers.

Dubai’s Roads and Transport Authority (RTA) has announced plans to launch a Blockchain -based vehicle lifecycle management system in 2020 that would provide customers which a history of their vehicle from “the manufacturer all the way to the scrap yard,” local news outlet Arabian Business reported yesterday, Feb. 27.

The Blockchain project, formed in connection with the Dubai 10x initiative, would show a transparent record of where each vehicle is at any moment of its life cycle. The initiative plans to begin by covering all cars in Dubai before expanding to all cars in the United Arab Emirates (UAE).

The Dubai 10x was launched last year at the World Government Summit by Sheikh Hamdan bin Mohammed bin Rashid Al Maktoum, the Crown Prince of Dubai, and the chairman of the Dubai Executive Council. Its website states that it aims to “embrace disruptive innovation as a fundamental mantra of their operations and to seek ways to incorporate its methodologies in all aspects of their work.”

According to Mattar Al Tayer, the chairman and executive director of the RTA, this vehicle lifecycle management system will be the world’s first government platform that can provide a genuine record of a vehicle’s history:

“The platform benefits many stakeholders including car manufacturers, dealers, regulators, insurance companies, buyers, sellers and even garages, providing transparency and trust in vehicle transactions, preventing disputes and lowering the cost of services. It tracks ownership, sale, and accident history to create smart, more efficient systems for supply chains.”

Arabian Business reports that the project will take on IBM as strategic formulation consultant, and future partners will include “Dubai Customs, Dubai Police, the Dubai Department of Economic Development, the Emirates Authority For Standardization and Metrology, Emirates ID, and the Ministry of Interior.”

This vehicle lifestyle Blockchain initiative falls in lines with Dubai’s goal to become the first Blockchain government by 2020. In October of last year, Dubai announced that it would release its own cryptocurrency, emCash, through its local government. Also in October, Dubai hosted its first government-backed training program for Ethereum Blockchain developers in collaboration with a Brooklyn-based Blockchain company.

However, both Dubai and the United Arab Emirates also released several warnings last fall to the public about the risks of Initial Coin Offerings (ICO) and the use of cryptocurrencies as legal payment, due to their anonymity and potential use for nefarious purposes.

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US Regulator CFTC Allows Staff To Trade Cryptocurrency, BTC Futures Remain Off Limits

US Regulator CFTC Allows Staff To Trade Cryptocurrency, BTC Futures Remain Off Limits

Cryptocurrency trading is now on the menu for Commodity Futures Trading Commission staff, its chief lawyer has said.

The US Commodity Futures Trading Commission (CFTC) has formally allowed its employees to trade cryptocurrencies, but maintained its ban on Bitcoin futures participation, Bloomberg reports Wednesday, Feb. 28.

The regulator, which together with the Securities and Exchange Commission (SEC) oversee asset and commodity legislation nationally, report that they made the decision earlier this month.

The CFTC chief lawyer, general counsel Daniel Davis, wrote in a memo to staff Feb. 5 that in response to “numerous inquiries [sic]” they could freely engage in the trading of cryptocurrencies.

Investing in Bitcoin futures products, which the CFTC began regulating after giving them the green light in December, would continue to be against the rules, however.

“In this environment, the situation is ripe for the public to question the personal ethics of employees engaging in cryptocurrency transactions,” Bloomberg quotes Davis as writing. The staff memo reportedly continues:

“Please keep in mind that you must endeavor to avoid any actions creating the appearance that you are violating the law or government and commission ethical standards.”

CFTC chairman J. Christopher Giancarlo joined SEC chairman Jay Clayton for a dedicated hearing on cryptocurrency Feb. 6, during which the regulators continued their broadly hands-off regulatory policy, focusing on investor awareness and consumer fraud protection.

In response to whether newly-liberated CFTC traders could have a hand in shaping that ongoing policy, Giancarlo’s spokesperson Erica Richardson was clear, stating:

“The chairman has made it clear that staff members who own Bitcoin should not participate in matters related to Bitcoin, as it presents a conflict of interest.”

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Jack Dorsey: Square Will Go Further With Bitcoin Than Buy/Sell Option

Jack Dorsey: Square Will Go Further With Bitcoin Than Buy/Sell Option

Jack Dorsey, CEO of Square, calls Bitcoin a “transformational technology”, plans to develop further options for users

Jack Dorsey, CEO of San Francisco-based payment service Square, revealed the company’s plans to focus on developing increased options for Bitcoin (BTC) use in a conference call Tuesday, Feb. 27 with Market Watch.

Dorsey, who is also the CEO of Twitter, specifically discussed the company’s Cash App, which now allows all users to buy and sell Bitcoin, telling Market Watch:

“Bitcoin, for us, is not stopping at buying and selling. We do believe that this is a transformational technology for our industry, and we want to learn as quickly as possible.”

According to Square’s 2017 Q4 report, also published Feb. 27, the company’s total net revenue and adjusted revenue have significantly increased compared to Q3 of 2017. Specifically regarding Bitcoin use in Square’s Cash App, the report stated positively:

“Additionally, customers can now buy and sell Bitcoin in Cash App. We observed that this was a feature our customers wanted, and we support Bitcoin because we see it as a step in the long-term path toward greater financial access for all.”

Currently available in 50 US states, Cash App allows its users to carry out instant fiat transactions, free cash-outs, and instant Bitcoin buy/sell option, which  was first launched for a limited part of users in November, 2017. On Jan. 31, Square released the Bitcoin buy/sell option to almost all users.

Earlier today, Cointelegraph reported that J.P. Morgan Chase released an annual report for 2017 to the US Securities and Exchange Commission (SEC) yesterday, Feb. 27, in which the company lists cryptocurrency as a “risk factor” for its future business.

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Coinbase: Bitcoin Buys And Sells ‘Intermittently Available’

Coinbase: Bitcoin Buys And Sells ‘Intermittently Available’

The crypto exchange and wallet Coinbase posted a status today that BTC buys and sells are currently only intermittently available, promises to restore full service soon

Crypto exchange and wallet service Coinbase reported today at 1:53 a.m. PST, about five hours ago to press time, that Bitcoin (BTC) buys and sells are “intermittently available”.

The notice on Coinbase’s status site states:

“A recurring issue with one of our processes is causing Bitcoin buys and sells to become temporarily unavailable. Our team is investigating and working to restore full service as soon as possible.

Coinbase customers may experience intermittent outages of BTC buys and sells over the duration as we resolve this issue. We apologize for any inconvenience this may cause.”

The official tweet announcing the service interruption this morning on Coinbase’s separate Support Twitter account was met with almost all negative comments from customers, some claiming their funds had been frozen on the service since long before.

Coinbase had experienced technical problems of a different kind earlier this month, when accidental multiple charges for credit and debit card purchases of crypto were reported by Coinbase customers. Visa accepted full blame for the issue, citing an unexpected error caused by the change of the merchant category code (MCC) for crypto purchases that took place at the beginning of February.

Coinbase’s site also suffered an outage on May 25 of last year, citing an unprecedented amount of traffic volume as the cause.

In mid-January, the Kraken cryptocurrency exchange was offline for more than 48-hours, after a regularly scheduled two-hour maintenance was extended when a bug was found in the production environment.

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