Japan, which recognizes Bitcoins as legal tender, is one of the biggest advocates for cryptocurrencies. Many in the industry seem to hope Japan, now trading 63% of the world’s Bitcoin, will be the liberal safe haven for ICOs. Despite this, there is still uncertainty over the country’s stance on ICOs. Contrary to popular opinion, many of Japan’s industries are risk-averse and conservative, and a crackdown ICOs is still a definite possibility.
Koji Higashi, the co-founder of IndieSquare, a mobile token wallet for users to transfer coins (including blockchain-based information, like event tickets or coupons), is not convinced that Japan is the safe haven for ICOs. Bitcoins and other crypto coins need regulation; this was the reason stated for China and South Korea’s ICO ban. He believes that the conservative and risk-averse nature of many of Japan’s industries could trigger a similar reaction.
“Japan’s not really ICO-friendly. [Regulators] are just more tentative. They’re just trying to figure out if it’s going to be good or bad,” he said during a visit to Seoul last week. “It doesn’t mean they won’t start regulating more heavily in the future when problems start emerging.”
While a small concentration of investors with large orders comprise most of the trading volume in Japan, the number of traders is increasing as less-technical users enter the fray, Higashi says. He is still optimistic that ICOs could turn into a revolutionary concept, giving Japan a head start in attracting many ICO projects. Companies worldwide are already relocating projects to Switzerland and Japan, a move that will help both countries earn tax revenue.
Japan plays a crucial role in the growth of crypto currencies and ICO markets, contributing heavily to the recent rise in valuations. A ban could potentially limit the number of investors and crypto currency exchange, diminishing liquidity in the ICO market. A move that could increase volatility and drive prices downwards.