Standing at the Forefront: Japan Embraces Cryptocurrency Despite Failures

Japan is one of the nations leading the cryptocurrency adoption, and legitimization, which has expounded the cryptocurrency business in Japan with its deeper technological advancements.

As reported by CoinIdol, a world blockchain news outlet, Japan has been progressing in digital currency adoption from the start. The first digital asset exchange in history was established within the country's borders in 2010. However, the opening ended in a great fiasco in 2014. This was the infamous case of Mt.Gox.

Setbacks in the spread of cryptos in Japan

Mark Karpeles, who bought the cryptocurrency company Mt. Gox from programmer Jed McCaleb in the first quarter of 2011, suffered a major loss in 2014 from cybercriminals who infiltrated his company and stole $460 million worth of bitcoin by then.

Mark was jailed for fake accounts, the company went bankrupt, and crypto transactions declined, silencing most investors who used Mt. Gox mainly for exchanges.

This experience was the main cause of concern for the Japanese government, and in particular, for drafting regulations that established strict guidelines and measures to protect other crypto companies from the same scenarios.

Despite this being put in place by the Japanese government, the crypto community has been repeatedly hit by cyberattacks. A case was observed in 2018, when a statistical investigation was conducted by the country's police department, which revealed that over $540 million was stolen by cybercriminals. Therefore, the Japanese government had to eliminate vulnerabilities in the community.

Filling the gaps in the system

Amidst the unstoppable crypto hackers, Japan acted boldly in 2016 and introduced cryptocurrency as a virtual currency for payments after amending a law that mainly deals with innovation in the Japanese finance sector. Japan's Payment Services Act (PSA) was enacted in 2009 and was intended to force payment service providers to register in order to make those services more secure.

In 2017, the PSA became applicable to all cryptocurrency exchanges and they were required to provide their customers with all procedures, keep their data, increase security, and take all other necessary measures to protect their customers' financial security from hackers and other unclear leaks.

In addition, some of the legal cryptocurrency companies in Japan have decided to follow common operational regulatory practices under the umbrella of the Japan Virtual Currency Exchange Association, known as self-regulatory organizations (SROs). This has helped to make the use of the currency safer and create good connections between the three parties, i.e. government regulators, cryptocurrency companies, and consumers.

A rush into the digital future

In Japan, the adoption rate of cryptocurrencies is as high as in South Korea, and most users are young men and women. This makes Japan one of the countries most welcoming of cryptocurrencies, as evidenced by its wide adoption by bars, service providers, and banks that use digital coins.

For the above reasons, it is likely that the use of cryptocurrencies will continue to grow and spread in Japan. The position of Japanese regulators is becoming more solidified with the support of the government.