Abstract : Shinzō Abe expressed strong support for the development of blockchain and start-up enterprises to face the challenge. This summer, it is expected that seven new virtual currency exchange platforms will arrive on the scene. The Financial Services Agency has announced the time needed for the approval procedure.
Though it has been a year since the bitcoin theft incident of Coincheck, which is the incident with the largest number of coins stolen in history, settled down, great changes have happened to Japan's major blockchain players and power has been re-distributed in Japan's blockchain industry.
First, licensed exchanges are very active. With strong support by Abe's government, this year, Japan's digital currency trading may see explosive growth. It will also be the year with the fastest adoption of blockchain technology.
At the Japanese Budget Committee meeting on February 5, Abe answered the blockchain related questions raised by Japanese economic critic and member of the House of Councilors Takeshi Fujimaki, stating,
I would like to call it “cryptographic asset”. Opportunities for the development of cryptographic assets abound in not only the financial industry, but other commercial areas, due to its convenience and security.
Right now, we have the “Sandbox System” for venture enterprises to create a new business model, the first in the world that will take advantage of virtual currencies' fast circulation. Objectively speaking, Japan's venture enterprises are highly competitive in this area. We must pay attention here. In fact, I studied cryptographic assets and blockchain. Additionally, it is vital to contemplate “what is the key to achieve world-wide success in this area”.
The industry's development doesn't rely on the government but relies on enthusiasm in the nongovernmental sector with venture capital at the center. Today, with the rapid development of the “fourth industrial revolution”, though the government cannot decisively say what the future development trends will be in this area, I believe it is necessary to research various “economic growth possibilities”, as said by many.
Besides cryptographic assets, blockchain technology can be applied to other Fintechs with many possibilities. It is essential that the security of these technologies is safeguarded but the ease of use should also be a factor for consideration. We expect all players in the field rise up to the challenges posed by this technology.
The Budget Committee meeting was held at the National Diet of Japan and all standing committees of the House of Representatives and House of Councilors participated. Japan's NHK broadcast the whole meeting live and it drew broad attention.
Financial Services Agency shortened time needed for examination and approval procedure.
On January 11, the Financial Services Agency announced time needed for the registration examination procedure. From the document published, it shows time needed is approximately six months. 180 platforms are paying close attention to this procedure. Among them, seven (not including the three that have already been granted licenses) have already started registration examination. Their examination procedure will take slightly less than six months.
The document published shows that enterprises that apply for registration need to answer more than 400 questions. It takes approximately three to four months to investigate and confirm print application documents. Onsite examination of enterprises takes approximately one to two weeks. Finally, the FSA will accept the registration application and make the registration decision, which takes roughly one to two months.
Last October, FSA published key examination points and also specific questions, in order to ensure that registration examination is efficient and transparent. All of these were carried out to target problems that emerged in the supervision process.
On January 11, after Coincheck was granted the formal trading license by FSA, former CEO Koichiro Wada stated that, “Personally, I'm still interested in ICO”. Wada, as a pursuer of blockchain technology, may continue to use his talent for Coincheck, instead of leaving.
Japanese government established “Diet Members' Alliance”, ready to impose strong regulatory control.
The Financial Services Agency proposed the strengthening of laws and regulations on trade practitioners at the National Diet and a “Diet Members' Alliance” with member with different opinions has been formed in Japan, including members who support active training of digital currency practitioners and also party members who support stricter laws and regulations who have self-titled their alliance “Diet Members' Alliance to Improve Digital Currencies”. Furthermore, a third party advocate priority being given to users.
180 exchange related enterprises whose application examination procedures have been delayed because of Coincheck must also be upset. However, now that FSA has announced its intention to accelerate examination, plus Abe government's policy of placation, it is expected that a new round of busy blockchain start-up activities will be seen before this summer.
Since its establishment in March 2018, JVCEA has been in the center of public opinions. Last year, assisted by FAS, JVCEA hosted 11 trade association meetings for practitioners and was dedicated to promoting the implementation of relevant laws and regulations in Japan, with strong impact.
At the beginning of this year, JVCEA announced its plan to expand the association and recruit more members. It is not cheap to get into the association. However, there are some great benefits for joining the association. Besides the 17 exchanges who have already acquired licenses as class one members, seven new members just joined, as class two members.
Even though Everone's Bitcoin and Last Root were granted licenses, they were deemed class two members. Only Coincheck, the former industry leader, joined the family of class one members.
However, though the industry is thriving, there is so far not a leader in the blockchain industry. The battle is still going on in Japan.
The distribution of power among giants is not clear.
At the end of January, three banking giants announced their decision to terminate their experiment of bank transfer using mobile phone numbers. All three banks stated that currently, they place more emphasis on their own service development and joint development by all three is not necessary.
“Joint venture is just a duplicate of their individual effort and thus there is no need to continue.”
The experiment by joint effort of the three banks started in 2017 and all three have been trying to develop transfer service using various methods such as customers' email addresses and mobile numbers. It was coordinated by Fujitsu. Fujitsu is still developing a smart phone application for point-to-point transfer. However, the progress is limited.
In fact, four banking conglomerates and three banking giants were established in the last century. The four conglomerates are: MUFG Bank, Mizuho Bank, Sumitomo Mitsui Banking Corporation and Resona Bank. The three banking giants are Mitsubishi UFJ Financial Group, Mizuho Financial Group and Sumitomo Mitsui Financial Group, Inc.
The three major banks' decision to terminate the blockchain cooperation project is the detrimental result of Japan's unique capital monopoly. Banks and credit unions have flourished in Japan and they act of their own will. Not only city banks and regional banks are incompatible, but banking giants, though all are city banks, serve significantly different clienteles.
Blockchain's data sharing is facing severe challenges in the Japanese banking system. It will be nearly impossible to open up the data of several major banks before breakthrough technologies emerge. Fujitsu's objective is to link all accounts in the three banks through technological advancement. In terms of level of acceptance, all three banks are well matched in their strength and further pressure from the government is needed for them to contribute their data.