Japan is becoming an exciting environment for virtual currencies. Renewed debate in government on favorable treatment of transactions this month has combined with big business opting to accept Bitcoin alongside other payment methods. Coincheck is a bitcoin exchange in Japan, and it has definitely noticed these developments.
Coincheck Reports Japan Moving Towards Treating Bitcoin as “Regular” Currency
The most recent announcement by entertainment giant DMM has opened up Bitcoin to 19 million consumers. Coincheck.com, the exchange facilitating DMM’s implementation, is in for a busy future, having already witnessed considerable growth over the past few years.
Bitcoin.com was fortunate enough to sit down with Co-founder and COO Yusuke Otsuka to hear how things are changing in Japan — for Coincheck, other businesses and consumers.
Bitcoin.com (BC): How have you noticed the appetite for Bitcoin and/ or alternatives changing over the past year or so? Have any developments been unexpected from your side?
Yusuke Otsuka (YO): The image of bitcoin in Japan has changed dramatically in past few years. When Coincheck started a bitcoin exchange service back in August 2014, everyone had a terrible image of a company doing bitcoin-related business in Japan.
Because of Mt. Gox’s bankruptcy people in Japan had a bad image of bitcoin. Back then, Japanese banks didn’t allow companies doing bitcoin-related business to open up a bank account. They didn’t want to take a risk of involving themselves in money laundering. News media in Japan also mentioned bitcoin as a fraudulent currency (e.g. prostitution, crime) making the image of bitcoin even worse.
Today (March 2016), a population of Japanese citizens who thinks bitcoin as superior technology is increasing. To prove this point, Coincheck has more than 3 billion yen in monthly transactions. User age range is between 20 and 60. Opening a bank account is not as difficult as before today.
BC: How has Coincheck’s growth accelerated over your history? How do you view future trends, and what preparations are you making for potential wider business interest?
YO: Coincheck started its bitcoin exchange as the last entrant to the market. Currently, we have the largest exchange volume in Japan. One of the reasons why we are leading the market is our finely tuned UX and super fast new feature release. Coincheck is the first in the market to add features like leveraged trading, credit card payments and iPhone/ Android apps.
We also put our best effort to make our service simple and easy to use so that everyone can buy bitcoin with ease. Looking at bitcoin markets in other countries, we think top two bitcoin companies will survive. Also, we think bitcoin will be accepted by consumers as one of a financial product. At Coincheck, we will continue to add forex trading like features such as future trading, enhanced leveraged trading, and stop loss order.
BC: What initiated the partnership with DMM? Is the integration planned to expand in future?
YO: DMM contacted us about a year ago since then we continuously approach them. We are planning to integrate our system with DMM’s CRM so even if there are a large volume of transactions we can support DMM at a deep level.
BC: Why did DMM choose to accept BTC at this specific time? Was there prior interest among the customer base itself?
YO: DMM had an interest in bitcoin for a while. Since DMM sell a wide range of digital content such as e-books, movies, and manga, payment like bitcoin where customers can pay instantly works well together.
They chose to accept at this specific time because DMM is seeking international expansion.
BC: You mentioned DMM is seeking international expansion. Do you consider Bitcoin will play a specific role in new markets?
YO: By offering more payment options merchants like DMM can acquire more customers overseas. Since the bitcoin payment transaction fee is significantly low, users overseas can purchase content at much lower fee compared to credit cards payment where it usually takes international transaction and currency exchange spread fees.
BC: How would you view public opinion on cryptocurrency in Japan currently? Are there fundamental differences compared to the US, for example, in terms of the demographics using or interested in using Bitcoin?
YO: At this point, there is no significant difference in bitcoin demographics. For example the majority of Coincheck users purchase bitcoin for investment purposes. Also similar to the States, nearly 90% of our users are male in 20s-30s.
One difference is that compared to the states there is still not many stores or websites where you can buy items with bitcoins. Including DMM bitcoin payment integration, Coincheck are putting our best effort to increase stores and website with bitcoin payments. By increasing the number of bitcoin-compatible stores/ websites we believe the number of users other than investment purposes will increase.
BC: In terms of legislation, apart from this week’s call to have Bitcoin be made tax-free, cryptocurrency in Japan still appears something of a gray area. How do you think this may change in light of first Ratuken’s, now DMM’s choice of accepting BTC payments?
YO: As published in NIKKEI newspaper’s front page on March 4, Japanese government proposed changes to current legislation today to include a definition for virtual currencies under domestic law. The definition reportedly sought to emphasize their “asset-like values” and use in online payments.
The situation of bitcoin market is changing rapidly and it moving towards a positive direction. After the announcement about the proposed changes to current legislation, many companies started to trust bitcoins and contacted us to ask more about our payment service. If bitcoin exchanges like us follow the guidelines and regulation we believe there should be no big issue.
May I note that Coincheck is a member of JADA (Japan Authority of Digital Assets). As a member of JADA, we work with the Japanese government and Japanese Financial Services Agency to establish standards and codes of conduct for bitcoin businesses. It is important for merchants like DMM.com to choose a reliable bitcoin payment service.
BC: What are your reactions to the Japanese government’s current debate on the status of virtual currencies?
YO: Recently Japanese government passed the new law that acknowledges bitcoin to have “asset-like values” to lower and upper houses of the legislature for review. However, this law is a completely different from taxing. In order to change tax involving virtual currencies government have to change law related to tax. Japanese government is moving towards treating bitcoin like a currency, so we believe they will not tax virtual currencies at least for bitcoins.
BC: How have you seen competition in your market developing? What services or tools do you offer to allow Coincheck to maintain a USP?
YO: There are about 4 major competitors in Japan. As a pioneer Japanese bitcoin exchange, we believe competition is positive to bitcoin market overall. We are an engineer centered startup. Unlike other bitcoin exchange service where board members background in finance, most of our Coincheck members are from a background in technology. Our members know how to code or know about technology at least. Our CEO developed our initial bitcoin exchange service in less than 30 days all by himself.
When we create our service we think about user experience first. As a pioneer of bitcoin exchange, we believe making practical services that are easy to use is essential to spread the usage of bitcoin to the general public.
For example, we are leading bitcoin payment service in Japan. We have a monopoly in bitcoin payment service where more than 1,000 merchants (ex: restaurants, bar, salons, etc. ) including DMM.com are using our payment solution. Recently, we have launched the Japan first donation-based bitcoin crowdfunding platform (coincheck.jp/donations). As you can see, we focus on user experience and do services that will be actually used by people so everyone around the world can benefit from bitcoin technology.
BC: How do you think the Mt. Gox legacy has altered Bitcoin’s image, locally and globally? Do you think there will be any long-lasting effect? We note the highly impressionable BTC transaction volumes for Japan over the past two years.
YO: Mt. Gox Legacy had a huge impact on bitcoin scene in Japan. Even now a typical Japanese consumer has bad image towards bitcoins thinking bitcoin is a cryptocurrency for criminals. However, we believe current situation will change in the near future. We believe the benefits people can gain from bitcoin will surpass the bad image.
Recently, Coincheck launched a bitcoin donation platform similar to a crowdfunding website. We are the first bitcoin exchange in Japan to do this. One of the major benefits of bitcoin is its low transaction fee. We thought a donation platform can empower current non-profit organization.
Since Japan is one of the largest forex trading markets, a majority of BTC transaction is from trading and investment. However, we believe this ratio will change in the near future.
BC: What’s next for Coincheck? Are there any developments you’re particularly excited to share?
YO: Since more than 90% of Coincheck users reside in Japan, we are planning to expand our services globally. Currently, we are talking to bitcoin exchanges around the world to make a remittance partnership. There are many migrant workers from Asia such as Philippines and India in Japan. They usually use traditional international bank transfer services just to send a small amount of money to their family (EX: Philippine people usually send 40,000 ~ 50,000 YEN per month). This payment method takes a decent amount of transaction fee. Bitcoin transfer can reduce the cost dramatically, enabling migrant workers to send more money to their family.
We are also planning to attract bitcoin traders from all around the world. As we mentioned earlier a majority of our users are in Japan. Currently at coincheck exchange, we only support JPY/BTC trading. We are planning to support USA/BTC and EUR/BTC. Traders will have more trading option and trading will be easier for people using USD or EUR as their everyday currency. We have also started over-the-counter trading service for traders who want to trade a large amount of BTC.
Recently, the Japanese government passed the new law that acknowledges bitcoin to have “asset-like values” to lower and upper houses of the legislature for review. The Japanese government is actively enforcing and regulating cryptocurrency. Such movement in Japan empowers bitcoin which could stimulate bitcoin trading market in Japan. In coming years, Japanse bitcoin market will be a very attractive market for traders all around the world.
What do you think about Bitcoin’s future in Japan? Do you think the country is positioning itself at an advantage in the Far East? Get involved in the comments section below!
Image courtesy of Tech in Asia, Coincheck, Educational Geography.