It all started from China last month, when Chinese regulatory bodies imposed a sweeping ban on any sort of fund-raising activities through virtual digital coins. This gave rise to a huge pessimism in the speculation-driven cryptocurrency market which witnessed a huge sell-off soon there after.
Just when the market was recovering from the Chinese woes, another Asian country – South Korea – announced its plans to ban ICOs sighting to its operational reasons of increased risk of frauds and it being highly unproductive and speculative in nature. Now, with two major Asian countries putting a complete ban on the operations of ICOs all eyes are on Japan, which currently dominates a 63% of world’s Bitcoin trading market.
Right from the early times, Japan has been quite an active and dominant player in trading cryptocurrencies with the government taking all necessary steps to legalise the use of Bitcoins in the country.
Recently, in order to protect the investor’s interests, Japan’s Financial Services Agency has formed proper internal systems to legalise and regulate the operations of cryptocurrency exchanges operating within the country. Earlier this month, the FSA identified 11 such cryptocurrency exchanges and gave licenses to continue their operations further.
However, in spite of all the optimism revolving around Japan’s cryptocurrency market, Koji Higashi, co-founder of IndieSquare a digital token wallet, prefers to stay cautious. Kofi believes that despite of all the positivity there is still a large uncertainty looming over the country’s stand on ICOs.
Understanding the overall scenario, Koji believes that the business sector in Japan is quite conservative and risk-averse and hence there is a “definite possibility” over the crackdown on cryptocurrencies and ICOs owing to its high volatile and speculative market behaviour.
During his visit to Seoul last week, Koji said: “Japan’s not really ICO-friendly. [Regulators] are just more tentative. They’re just trying to figure out if it’s going to be good or bad. It doesn’t mean they won’t start regulating more heavily in the future when problems start emerging.”
However, with proper framing of rules which can protect investor’s interest, Koji believes ICO could turn out to be a revolutionary concept giving Japan an early lead in several ICO projects. He says that companies from across the globe have already started moving to Japan and Switzerland and such a move would potentially give a big boost to these countries in collecting tax revenue.
Mr. Koji says that the flip side of this should not be ignored and with many ICO scams surfacing out in the recent past, there is a huge risk of gullible investors getting trapped in the ICO-wave.
Such a fraudulent flooding of ICOs will give the government a rather strong reason to impose ban on ICO operations. Imposing such a ban will make investors more fearful and ultimately result into less participation.