Which cryptocurrencies have been legalized in Japan. What will the recognition of cryptocurrencies in Japan lead to? New type of Japanese businessmen
Today, Bitcoin in Japan is a legally recognized currency. Bitcoin holders are protected by law, and its circulation today is not regulated. Let's look at how the status of cryptocurrency has changed in the land of the rising sun, and what threats it faces now.
Early 2013: Chinese investors transfer assets to Japan
The explosion of popularity in Japan came in 2013, when China introduced a package of laws restricting the exchange of Bitcoin. Crypto investors moved their accounts to a cryptocurrency-liberal country.
Over time, bitcoin has evolved from a tool for investment and speculation into a full-fledged widespread currency. Online stores began to accept Bitcoin for payment, and Japanese freelancers accepted cryptocurrencies on a par with . Soon Japan took the first position in terms of domestic Bitcoin turnover, and Japanese exchanges today process from 30 to 50% of all transactions.
April 2016: legalization
Due to the widespread use of Bitcoin as a payment currency, the government has legalized cryptocurrency and other virtual currencies.
By this time, the turnover of cryptocurrencies in Japan exceeded two billion dollars (this is an estimate of the value at the exchange rate of all bitcoins, ethereum, litecoins and other cryptocurrencies whose holders use the yen as the main fiat currency). At that time, it was already considered normal in Japan to pay employees in Bitcoin.
Commenting on legalization, the authorities warned that
The real value of virtual currency is difficult to assess, which is why holders may suffer unexpected losses.
December 2017: Ministry of Finance invites to discuss regulation
The Japanese Finance Minister spoke about Bitcoin, noting that the cryptocurrency has not yet proven its reliability, and that it still remains a tool for speculation.
No one has yet defined Bitcoin as a currency. It's a difficult question
he said.
The minister also called on the G-20 countries to discuss the issue of regulating cryptocurrency at the global level.
What does this mean for us?
Any news about upcoming regulation pushes people to withdraw Bitcoin and, as a result, to . Over the past week, amid news about the ban on Bitcoin in South Korea and possible regulation in Japan, the rate fell below $15,000, falling in price by more than 10 percent per day. This was a natural decline following a sharp jump, but in the future such initiatives will lead to an even greater decline, since according to various estimates, today the yen accounts for up to 50% of all global bitcoin trading. Until this point, crypto investors viewed Japan as the only first world country with a clear position on the legalization of bitcoin.
What do you think, will Japan introduce real restrictions on Bitcoin or will everything be limited to disapproving statements? Write about it in the comments to the article.
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As of August 12, 2018, the Bitcoin cryptocurrency continues to lead among other virtual coins, ranking first in capitalization ($108.6 billion) and exchange price ($6.3 thousand). Despite the temporary price decline (after strong growth in December 2017), many see BTC as a powerful investment tool. The greatest risks remain from the position of regulation, because not all states allow the free circulation of cryptocurrency and create a number of obstacles to its development. Below we will consider in which countries the Bitcoin currency is allowed as of August 2018.
In which countries has Bitcoin been legalized?
There are many countries in the world that have already recognized Bitcoin and do not put obstacles to its circulation.
Japan
In 2013, the popularity of Bitcoin increased sharply, and a package of laws appeared in China limiting the conversion of BTC. Participants in the crypto network were forced to transfer their savings to Japan, which was more loyal to Bitcoin.
Over time, the range of applications for cryptocurrency has expanded. In addition to being an investment tool, BTC is increasingly being used in retail trading. It is accepted at retail outlets, and some freelancers use Bitcoins along with EPS wallets. Against the backdrop of growing demand and loyal policies, Japan has become the leader in Bitcoin turnover within the country, and in 2018 its exchangers accept 30–50% of all transactions.
Until 2014, the country's government did not think about legalizing Bitcoin. This idea appeared after the bankruptcy of the Mt.Gox exchange platform, whose clients lost hundreds of thousands of Bitcoins. The legal proceedings lasted several months, and after their completion it was decided that there was a need to regulate the cryptocurrency sector.
The bill on the legalization of cryptocurrency came into force on April 1, 2017. From this moment on, Bitcoin and other virtual currencies received the status of an official instrument for making payments. Subsequently, it was announced that the Auditing Standards Board would develop and provide to the public a list of rules for the use of virtual coins. It's easy to explain. Japanese authorities fear that companies that own cryptocurrency may inflate the value of BTC, which will lead to financial losses in the future.
According to statistics, the turnover of popular altcoins in Japan in 2015 was about 185 billion yen, and by 2020, according to experts, this figure will grow to 1 trillion.
More about the legalization of cryptocurrency in Japan:
Estonia
Estonia is a small country, but when it comes to Bitcoin, it is considered a progressive power. Before the decision of the EU Court of October 22, 2015 on the exemption of exchange transactions with Bitcoin from VAT, the country’s Central Bank did not recommend that citizens invest money and store it in virtual currency. However, then Bitcoin moved from the category of a commodity to the category of a currency. In addition, after changes in legislation, virtual coins were no longer treated as a financial pyramid, which only strengthened the position of BTC.
At the end of November 2017, the government legalized Bitcoin in the country, allowing entrepreneurs to open cryptocurrency businesses. This became possible thanks to a new bill aimed at combating the laundering of illegal proceeds. The new law positions Bitcoin as a virtual currency that can be used as a settlement tool. At the same time, Bitcoin is not recognized as the money of any state or foundation. In addition, the bill clearly defines the rules regarding BTC to fiat currency exchange transactions, as well as Bitcoin wallets. Monitoring compliance with legal requirements in the cryptocurrency sector is entrusted to the EFIU (Estonian Financial Intelligence Unit).
It is worth noting that Bitcoin and other virtual coins are not positioned by Estonian regulators as securities or electronic money. The Payment Institutions Act (PIEIA) states that Bitcoin cannot be classified as electronic money, because it does not have a clear issuer.
Generally speaking, the Estonian government has allowed the use of Bitcoin as an alternative payment instrument. Cryptocurrency is perceived from the perspective of an unconventional asset that has its own price and is used outside the standard financial system. At the same time, in recent years there have been more and more proposals to create an internal cryptocurrency that would be completely controlled by the government.
USA
The United States plays a significant role in the development of the cryptocurrency sector. This is not surprising, because millions of crypto network users live here, and Bitcoin itself has long become part of the country’s economy. Work on regulating the cryptocurrency industry began here back in 2013. Most of the startups created in the United States are based on blockchain technology. Also in this country there is the largest number of BTC ATMs.
The United States is a power with a powerful economy and a confident approach to regulating the cryptocurrency market. Representatives of many countries are turning to the United States for recommendations on the legal status of Bitcoin. They are using the experience of the United States to create their own control system for this sector.
Let us recall that the United States has one federal district and 50 states, each of which has its own positions in relation to cryptocurrency. Thus, the state of Washington became the first to announce the recognition of virtual money. Today, this payment instrument falls under the term “money”, which is mentioned in the Foreign Exchange Act (UMSA). Companies are forced to obtain a UMSA license in order to conduct cryptocurrency transactions.
There is a lot of talk in New York State about introducing special BitLicenses. Their goal is to force Bitcoin startups to complete additional documentation for transactions. At the same time, the general attitude of the state authorities towards cryptocurrency is hostile.
California has a loyal approach to virtual coins. Cryptocurrency transactions are available here, but only after obtaining a license from the Department of Comprehensive Health.
Despite a number of difficulties in individual states, the legalization of Bitcoin was officially confirmed in December 2018, and on December 18, futures trading began on the country’s major commodity exchanges - CME and CBOE. At the same time, since the beginning of 2018, a bill has come into force, according to which all transactions with cryptocurrency are subject to taxation. Previously, such an order already existed, but for a limited number of operations. From January 1, 2018, taxes will have to be paid on all transactions with cryptocurrencies. In this case, the rate depends on the duration of storage of virtual coins. If coins are stored for up to a year - from 10 to 37 percent, and if more - up to 24 percent.
On February 6, 2018, the largest US Commissions (Securities and Commodity Futures Trading) agreed to the introduction of virtual coins into the monetary system of the United States. According to representatives of these organizations, the use of cryptocurrency can stabilize the country’s economy and increase financial flows.
- Read also about.
Sweden
Compared to other EU countries, Bitcoin feels no less “comfortable” in Sweden. The country's watchdog has legalized the cryptocurrency sector and declared Bitcoin, as well as other virtual coins, as an official means of payment. At the same time, organizations carrying out exchange operations with fiat money must obtain licenses taking into account the rules in force within the country, in particular, KYC, as well as AML/CTF. In addition, clients of such companies must undergo identification.
Transactions using Bitcoin do not require payment of VAT. As for cryptocurrency mining, there is a tax on profits from business activities.
Today, it is in Sweden that many Bitcoin-based startups are emerging, primarily in the exchange sector. The most popular of them is Safello. In addition, this is where the famous creator of mining equipment, the ASIC manufacturer KnCMiner, is based.
Netherlands
In 2018, the Netherlands is one of the countries that are most loyal to cryptocurrencies. It even has its own “Bitcoin city” called Arnhem. Its peculiarity is the ability to pay with BTC for almost any product or service, including housing and communal services.
The Money Laundering and Terrorist Financing Act addresses the definition of digital currencies, but BTC and other virtual coins do not fall under this term. From the position of the tax sector, Bitcoin and other altcoins are perceived as a means of payment, and when sold, as a commodity.
If Bitcoin is used only to pay for goods or services, no tax is charged. At the same time, residents of the country, when entering information into tax returns, must take into account the value of virtual coins and take it into account in the “Capital” column.
As for the banking sector, it is positive about Bitcoin and other cryptocurrencies. For financial institutions, technology is one of the tools to improve technology and reduce transaction costs. It is not surprising that in recent years representatives of the Netherlands have been increasingly participating in various conferences dedicated to the cryptocurrency sector.
In March 2018, the country’s Ministry of Finance proposed tightening control over cryptocurrency transactions and taking global experience in regulating virtual coins as a basis. The Ministry notes that with such actions they are trying to protect buyers of virtual coins. In addition, it is proposed to register cryptocurrency and exchange platforms operating within the country with mandatory identification of clients. According to the minister, this requirement must be met by the end of 2019.
For more information on using Bitcoin in the Netherlands, watch the video below:
Canada
When considering the question of which country is Bitcoin in free circulation, it is worth highlighting Canada with its liberal approach to the cryptocurrency sector. Based on legal regulation, Bitcoin is positioned as a means of payment, which is confirmed by the huge number of crypto ATMs. In terms of the number of such devices, the country ranks second after the United States. At the same time, local regulators do not always control transactions with virtual coins, but only when such a need arises. The rest of the time, attention is paid to the development of digital currency and related technologies.
Canada has a rich history of developing the cryptocurrency sector. Thus, in April 2013, the country's banks closed the accounts of many crypto exchanges due to lack of licenses. At the beginning of 2014, the Ministry of Finance stated that Bitcoin is not recognized as a means of payment, but the Central Bank noted that virtual money does not pose a threat to the country’s financial system.
In 2014, a bill was proposed for consideration, according to which:
- Cryptocurrency exchange platforms must register with Fintrac.
- Banks are prohibited from opening accounts with exchanges that have not registered with Fintrac.
- Companies are required to inform regulators about suspicious transactions, identify customers and follow a number of other rules.
On September 11, 2017, information appeared on news sites about the legalization of transactions with cryptocurrency by Canada. Thus, the local Securities Commission (BCSC) announced the registration of an investment company, which, in turn, plans to open a Bitcoin fund and offer investment services.
At the end of January 2018, Canada abandoned taxation of the cryptocurrency sector. The only thing that remains mandatory is user identification. At the same time, the Ministry of Finance stated that in the future it is planned to maintain a loyal policy towards cryptocurrencies, and there are no plans to tighten the position in the near future.
Video about Bitcoin in Canada from a crypto network user:
Germany
At the end of February 2018, news appeared that Bitcoin was recognized as an official means of making payments. In addition, the Ministry of Finance signed a corresponding resolution, which determines that purchases for Bitcoin are not subject to taxation. The official document reflects a European court decision from 2015, where Bitcoin is defined as a currency in the tax sphere, and VAT on the purchase of goods and services for cryptocurrency is abolished. It is worth noting that, according to the decision of the European Court, each EU country has the right to make an independent decision regarding virtual coins and regulation of this sector.
Thus, in 2018, Bitcoin in Germany is a currency that acts as a legal means for conducting transactions. The current leadership of the country has created a precedent in the issue of taxation of cryptocurrency, and other EU countries can take this example into account. Interestingly, miners who make profits from cryptocurrency mining also do not pay taxes.
Video about the legalization of Bitcoin in Germany:
Australia
Discussions about the legalization of virtual currency began at the beginning of 2017, and already on July 1, Bitcoin was given the status of ordinary money. From now on, Australian residents can use cryptocurrency. In the spring of 2018, Bitcoin appeared on newsstands, where anyone can buy it. Moreover, the country's authorities insist on recognizing cryptocurrency as the official state coin. To promote such an idea, a special group has even been created - “Parliamentary Friends of Blockchain”.
In April 2018, updated operating rules for Australian crypto exchanges came into force. Now exchange platforms are required to register with Austrac, identify clients, report suspicious transactions, and follow other rules. In addition, information about transactions performed must be stored for at least 7 years. Violation of these rules entails liability, including criminal liability.
Belarus
On December 22, 2017, Bitcoin and other cryptocurrencies received legal status. The decree “On the development of the digital economy” signed by the President of the country does not imply restrictions on exchange transactions, sales, or the operation of cryptocurrency exchanges and other companies related to virtual coins. In addition, until 2023, BTC mining, as well as cryptocurrency purchase/sale transactions, are not subject to taxation. There is also no need to declare savings in virtual coins.
Video about Bitcoin in Belarus:
At the same time, despite the adoption of the law, cryptocurrencies in Japan have not become legal tender.
In most countries of the world, cryptocurrencies are not recognized as legal means of payment, which can be used to purchase goods and services and mutual settlements, and also cannot be part of the currency exchange system. At the same time, there is no legislation that strictly prohibits the use of cryptocurrencies as means of payment.
This ambiguous status has led to the conversion of cryptocurrencies into the “shadows” - semi-legal financial offices have appeared that provide services for exchanging cryptocurrencies for legal currency and making payments with conversion when purchasing goods or services. Some such companies are registered in Japan.
Thanks to the adopted law, Japanese firms whose internal rules allow working with cryptocurrency can now use Bitcoin and Ethtereum for mutual settlements with each other. In addition, companies and individuals can purchase this virtual money as a commodity, not subject to the mandatory eight percent consumption tax.
Consumption tax in Japan is a kind of analogue of value added tax. In Japan, consumption tax is paid on the purchase of most goods and services and is a tool for balancing the government budget. For example, to counter the financial crisis and support low-income families, the tax was increased in 2014 from five to eight percent.
Meanwhile, despite the adoption of the law on virtual currencies, Bitcoin and Ethereum specified in it did not become legal tender in Japan. This means that companies and individuals cannot use this currency to directly purchase goods and services. Instead, they are required to use the services of registered exchange offices.
In order to obtain the status of a registered cryptocurrency exchange, a company in Japan, according to the new law, must have an authorized capital of at least ten million yen (88.2 thousand dollars) and a secure computer system for conducting financial transactions. In addition, such an organization is required to undergo an audit every year.
At the beginning of March of this year, the rate of one bitcoin on the shadow market for the first time in the history of this currency exceeded the rate of a troy ounce of gold (31 grams). On March 3, the cost of one bitcoin reached $1,280, while a troy ounce of gold was trading at $1,233. At the same time, Bitcoin is known for its sharp volatility. So, in mid-2015, one bitcoin cost just under $200.