A rather modern country, Japan has long been recognized as a pioneer when it comes to the implementation of various innovations. Japan is even leading in the count of vehicle production as it’s ranked #2 in Asia, manufacturing no less than 9 million of them, only trailing behind China. Just like how their cars continue to bring the latest technologies to the automobile industry, Japan is also a hub to an ever-developing Fintech industry.
As this fintech industry grows, Japan has tried their best to support and facilitate its development. Since the start of growing investments in Japan’s fintech industry in 2015, Japan has shown that they are willing to adapt – a quick example would be their Tax Exemption Program for NISA (Nippon Individual Saving Account), that gives personal investors an exemption from paying taxes on their booked profits, up to $8,890 per year. This decision was made to encourage people to invest their money rather than simply saving it, and could be a catalyst that encourages more investors to participate in their Fintech industry.
Japan has been fast in responding to one of the latest trends in the fintech world: cryptocurrencies. As many new exchanges that facilitate buying/selling of cryptocurrencies started emerging all around the world, the trend made it all the way to Japan. This led to a rather not-so-comfortable result: in January 2018, nearly $500 million was stolen as hackers managed to find their way through the security measure of Coincheck, which at that time was one of the largest cryptocurrency exchanges in Japan. In response to this hacking, the FSA (Financial Services Agency) of Japan and local Finance Bureaus conducted investigations and on-site inspections of some other Japanese cryptocurrency exchanges. This would, hopefully, provide more support for users of cryptocurrency exchanges, along with the already-existing regulations in Japan’s Payment Services Act. Basically, any crypto businesses would need to be registered, and they would also be required to always keep records, take necessary security measures, and make sure customers are protected. As one of the pioneers in the crypto ecosystem, this law has existed in Japan since 2017.
For the Fintech world in general, Japan has a list of activities that would require licensing in their specific jurisdiction. This includes any companies that engage in the arrangement of investments, fund management, and the banking business.
With such thorough and well-thought regulations to protect consumers, it is no wonder that the Fintech industry in Japan continues to bloom.
Japan’s Financial Services Agency (FSA) has revealed its list of 11 pre-approved companies to run crypto exchanges. This means that these exchanges (which include Bitbank and BitFlyer) have successfully passed the requirements of FSA to be deemed safe and given the go to operate. This means that customers can safely choose from these 11 exchanges, knowing that the FSA has taken precautions to protect them and their interests.
Blockchain and other tech
It’s thought that the Japanese will continue to be welcoming to blockchain technology and continue to embrace it as it’s becoming more widely adopted in the country. Yoshitaka Kitao, the chief executive of SBI Holdings, thought that blockchain-related technologies could be the factor that drives Japan’s economy further upward again.
This, combined with the 5G technology and Internet of Things, could very well be the trigger that Japan needs to experience another economic boom like it did in the 1970s-1980s. Note: 5G has some concerned about potential ill health effects.
Despite all the positives that show that Japan is ready to adapt to new, sophisticated things, what remains to be seen is the market and how it behaves and could possibly respond to these new trends.
One can probably remain positive though, as at least 88% of Japanese have heard of Bitcoin, and at least 47% of them have used Bitcoin in retail stores. This means adoption is real in Japan, and the demand is there.
If Internet user count and its penetration rate is also to be taken into account, the trend in the fintech industry should only grow stronger, as in 2017 alone, Japan was recorded to have 103.89 million internet users. Japan is projected to have at least 104 million internet users in 2022. Further exposure to the Internet and technology could only be beneficial for Japan’s fintech industry as people will become more aware of what they have to offer to the masses.
Exposure to smartphones could also be another driving factor, as there are more than 60 million people using them in their daily lives. This figure is estimated to grow, reaching 68 million by 2022.
With all the responsiveness of Japan’s authoritative institutions and government, we can remain positive of the future of fintech in Japan. The future of Fintech in Japan should be bright as it is further supported by the raising penetration rate of technology. The embracing of different kinds of innovative financial-related services should continue to grow in Japan, and as it has shown in the past a few times, Japan could also be one of the pioneers leading the world to be more receptive and welcoming towards such services.
One of the ways in which you can start participating in welcoming the future (which includes cryptocurrency as a product of fintech), would be to start investing. An alternative investment worth checking out is our DinarCoin, our unique digital currency that’s pegged to the worldwide spot price of gold. This means that you can have the value and hedging aspects of gold right along with the speed and flexibility of cryptocurrencies – without the volatility usually associated with them.