Koji Higashi is one of the most prominent figures in Japan’s crypto ecosystem, working full time in the Bitcoin and blockchain space since 2014. He is the host of “Bitcoiner Hanseikai”, one of the most popular cryptocurrency and blockchain YouTube channels in Japan, and manages various other content projects (blog, podcast and op-eds) aimed to keep the local community updated and educated. He also consults local crypto enterprises and assists foreign firms to successfully enter the Japanese market.
We sat down with Higashi to discuss the local crypto market, the implementation of cryptocurrencies by local vendors, the entrance of Japanese forex giants to the crypto industry, taxation, regulation, and much more.
Higashi noted that the story of cryptocurrency in Japan started with a rather scandalous note – the MtGox scandal. This was an infamous mystery regarding the disappearance of ~650,000 bitcoins and millions in fiat currency when the Japanese exchange was allegedly hacked. It later declared bankruptcy. “Many people said that Bitcoin is very sketchy and dangerous,” said Higashi.
Having said that, public perception rapidly recovered and the implementation of cryptocurrency in general and BTC in particular has been on the rise. Many large corporations are entering the crypto space, many of them coming from the forex industry: “DMM is accepting Bitcoin. They started kind of early.”
However, Higashi notes that the forex companies’ commitment to the coin varies: “GMO, for instance, they not just doing an exchange. They’re also entering the mining competition. Now that’s a big commitment. They have to be very serious and to believe in the technology…SBI is also pretty committed to the crypto space.” In other cases, crypto-oriented projects are used “only for marketing.”
Japan is considered to be quite innovative in the field of trading cryptocurrencies. Just recently, GMO Internet, a local communications giant, announced its plan to allow its employees to receive part of their salaries in Bitcoin. Retail vendors, such as a big electronic equipment chain and one of the biggest car dealerships, now accept Bitcoin payments.
But Higashi is very critical of taxation in his country, which he considers to be hurting the industry quite a lot. “If you make more than $100,000 in crypto gains, they take 55%. It’s a big issue on Twitter in Japan now”.
This doesn’t stop with trading: “It doesn’t make sense to use Bitcoin as a payment in Japan. Technically, you can buy a car now using Bitcoin, but it doesn’t make sense because of the tax. Bitcoin payment is also a taxable event. If you buy Bitcoin and the price went up, and then you buy a car using that Bitcoin, you have to report it. This makes Bitcoin payment much more complicated.”
No face to face trading
Japanese exchanges (such as bitFlyer, Coincheck and the ones established by GMO and DMM) are considered to be very dominant with regard to their share of the global trading volume and number of traders, partially due to them being the only way to trade cryptocurrencies: “There are virtually no local face to face trading in Japan. 99.9% is going through an exchange.” But not everyone can get a slice of that pie, as the threshold for entering the crypto exchange business is very costly: “It probably costs more than $1 million just to be compliant and get a license.”
Higashi touched on the more famous local altcoins, such as Monacoin and Cardano, and expressed his scepticism with regard to their substance.
“It’s basically the Japanese Dogecoin. A meme-based coin that was supposed to be a joke. But the community is very active and you can use it to buy goods and services or even for tipping on social media,” he said.
He is also not thrilled with the local leader of market cap charts – Cardano – the coin referred to as the Japanese Ethereum: “I don’t consider Cardano as a Japanese crypto coin. What do you even know about Cardano? They have barely a wallet. They also have some questionable ICO practice – they sold their coins only to Japanese, mostly those who didn’t know much about it. Since then, nothing really went on with that. I would question if there’s any substance to it.”
Higashi is also skeptical of non-Japanese altcoins, such as IOTA and Ripple: “I tried to use IOTA a few months ago, but their wallet didn’t work. A lot of people also claim it’s not usable. It has a long way to go before becoming fully functional and decentralized”. As for Ripple, Higashi says that it’s not really a blockchain: “It’s just a bridge currency for international payment. But it’s not really a currency.”