As with many of the world’s technological fields, Japan has long been at the forefront of Bitcoin adoption and development. The world’s first major Bitcoin exchange was located in Tokyo and it accounted for the majority of Bitcoin’s trading volume for about three years. Japan remains a major player in terms of the crypto trading volumes reported by its exchanges. At the start of 2018, it was estimated that Bitcoin-related economic activity added 0.3% to Japan’s GDP.
It’s not only trading volumes which make Japan a key nation in the Bitcoin world. The Japanese government has kept pace with developments in the fintech sector, being one of the first states in the world to officially recognise Bitcoin as “real money,” back in early 2016. The government has also passed comprehensive regulation aimed at ensuring the security and legality of all crypto businesses operating within Japan.
Japan’s corporate sector is also deeply involved in Bitcoin. Certain Japanese banks and IT firms have committed themselves to the success of cryptocurrency, via significant investments into Bitcoin mining and exchange trading. Numerous Japanese companies are experimenting with all kinds of blockchain applications to improve their business efficiency. It’s even possible that Bitcoin’s creator was Japanese, given that they chose the pseudonym, “Satoshi Nakomoto.”
If you’re in Japan and looking to get involved in the Bitcoin revolution, then this guide will explain the situation in your country in regards to regulation and taxation. We’ll also explain how you can quickly and easily purchase your own bitcoins from Coinmama, using any credit or debit card issued by either VISA or MasterCard.
Japanese Exchange Hacks and the Regulatory Response
In the intro, we mentioned the first Bitcoin exchange with significant volume was in Japan – this was of course the infamous Mt. Gox. When this exchange failed in 2014, about 650,000 bitcoins were lost. While a share of these coins has subsequently been recovered, losses amounted to nearly half a billion Dollars at the time. However, this was not to be the last major exchange failure in Japan.
In 2018, Tokyo’s Coincheck exchange was hacked for roughly $500 million worth of the altcoin NEM (New Economic Movement). This was too much for Japan’s Financial Service Agency (FSA), which stepped in with strict rules for exchanges to prevent another such occurrence. In April of 2017, the Payment Services Act was revised, requiring exchanges to register with the FSA and comply with a series of rules.
In March of 2020, the FSA launched its Blockchain Governance Initiative Network to accelerate Japan’s crypto industry. There is also a private consortium comprised of 24 Japanese exchanges, known as the Japan Virtual and Crypto Assets Exchange Association, which aims to improve self-regulation within the industry.
In April of 2020, Japan enacted new regulations requiring any crypto company in the country to obtain an operating license. These regulations should further increase the security of the Japanese crypto industry. For example, it is now a requirement that customer funds be stored in offline cold wallets, beyond the reach of hackers. Rest assured that Coinmama, while not under Japanese law, makes every effort to ensure customer safety. We have a spotless security record since our founding in 2013.
Japanese Taxation of Crypto
Under the guidelines formulated in late 2017 by Japan’s National Tax Agency, Bitcoin profits will be taxed as income. If you report fewer than 20 million yen in annual earnings or make less than 200,000 yen in trading profit, you should not be taxed at all.
Tax is levied whenever you sell or spend your coins. As crypto is considered to be similar to other forms of money, no consumption tax is applied to Bitcoin transactions. Note that Bitcoin losses are not deductible for tax purposes.
Japanese Blockchain Projects
Japan has implemented clear and fair rules regarding the regulation and taxation of Bitcoin and other cryptocurrencies. This approach has encouraged the local fintech industry, and numerous projects have resulted. Although not the biggest, one of the most forward-looking projects is being conducted by Chubu Electric Power Company, which is testing out utility bill payments via Bitcoin’s new Lightning Network technology.
Also significant is the role played by Japanese IT giant, GMO Internet Group. In mid-2018, GMO launched a cutting edge Bitcoin ASIC miner, the B3, which at the time achieved more than twice the hashing power of its competitors.
Another project which demonstrates the increasing role of cryptocurrency in Japan’s economy is the involvement of banks in the industry. SBI Holdings became the world’s first bank to launch a crypto trading platform, known as VCTRADE. SBI’s crypto plans remain ambitious, as in late 2020 the group acquired a crypto trading firm and partnered with Switzerland’s leading stock exchange on a new crypto exchange platform to be based in Singapore. In early 2021, SBI and SMFG (Sumitomo Mitsui Financial Group) announced the development of a new Japanese blockchain-based stock exchange, scheduled for launch in 2022, which will compete with the Nikkei.
How to Buy Bitcoin in Japan
Interested in becoming a part of this exciting new industry? Coinmama allows people in Japan to buy bitcoin (BTC) via any debit or credit card issued by either VISA or MasterCard or bank transfer. If you’re looking to buy bitcoin, then Coinmama allows this in a few simple steps:
Step 1 – Create Your Coinmama Account
1. Head to the main corporate header menu and select the light blue “Sign Up” tab at the top right (or click here). Note: if you already have an account, just sign in via the “Log In” button with your existing login details (or click here).
2. Enter your email, password, first name, last name and your country of residence.
3. Look for an email from Coinmama asking you to confirm your account. Click the link in the email to complete the registration process.
** Note: for more information on how to create an account with us, click here.
Step 2 – Get Verified for Purchase
1. To purchase bitcoin (BTC), you first need to become verified.
2. It’s necessary to enter your personal information and upload your ID or passport, plus various other documents depending on which level of verification you wish to reach.
Our verification team works 6:00-23:00 UTC. If everything looks ok, you should be verified in about fifteen minutes during working hours, or as soon as we’re back at our desks. If we have a question about your documents or need more information, we’ll let you know. Once your account is verified, you’re ready to buy Bitcoin!
**Note: for further help with account verification, please click here.
Step 3 – Place your first order
1. Once signed in and verified, click the “Buy” button and select “Bitcoin”.
2. Next, choose the amount you would like to buy. You can select a package, or enter the fiat amount or crypto quantity you’d like to buy of up to roughly $5,000 (as of the time of writing) for card purchases or $15,000 for wire transfer purchases.
3. Supply your Bitcoin wallet address. If you’re unsure what this is, please check out this article. The address you enter is where we’ll send the coins which you buy. You can re-use this address for subsequent purchases or get a new one from your wallet, at your discretion.
4. Then, select the “Go to Payment” button.
Step 4 – Complete your Checkout
1. Select your payment method. Users worldwide can choose to buy bitcoin with a credit card, debit card, bank transfer and now Apple Pay.
2. Enter your payment details and click the “Buy” button.
Note: For card purchases, kindly note that only cards issued by VISA or MasterCard are accepted. As for wire transfers, they usually take 1-2 business days to post. This means that when paying via wire transfer, you will get the rate at the time your money arrives at our account. This means that during times of high price volatility, you may get a rather different Bitcoin amount (either more or less) than expected.
Once payment has been made, our BTC transaction to your wallet’s address then needs to be confirmed by the Bitcoin network. In approximately 10 minutes, a Bitcoin payment will be broadcast from Coinmama’s wallet to the Bitcoin address you supplied in Step 3, point 3.
Note that during times of especially high traffic, your transaction may take longer than normal to appear as confirmed within your wallet. Ordinarily, the transaction will be confirmed within 10 minutes. For large amounts, this might take a little longer (up to an hour).
Conclusion
Japan’s long history in the Bitcoin industry, combined with its clear and fair regulatory environment, ensures that Japanese citizens are well-aware of Bitcoin and able to purchase it without any legal or tax concerns. We at Coinmama hope and expect that Japanese involvement in Bitcoin will grow even more significant in the years ahead.
