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A recent press release made on April 10, 2020 from Japan based Crypto Exchange firm Decurret (D-caret Co., Ltd) announced a capital increase of 2.75 billion yen (approximately USD $25M) by issuing new shares through a third-party allotment.
Why does it matter?
This was implemented in a manner in which a certain amount of debt arising under the plan was allocated to capital (so-called pseudo debt equity swap) where IIJ (Internet Initiative Japan) is the largest shareholder. They aim to use the capital to enhance transactions and services for existing virtual currencies as well as to expand digital currency and settlement services.
Real Use Case
The firm is promoting cryptocurrency in Japan and its real use case to become a solution for Japan’s public transportation payment system.Due to the ongoing pandemic (Covid-19), Japan is under a state of emergency to combat the spread of the said virus, but it seems it did not affect the public transportation in the country. Though the numbers of bus and trains operation has been reduced, the number of commuters and stations are still full which continuously operates as if nothing happened.
How is it being used as a payment?
Nearly 70 million payment cards issued are being used by 126 million people in the country and can be topped-up with cryptocurrency by using a system according to Decurret’s proposal.
While a new Japanese crypto law will take effect starting May 1, 2020, the crypto exchange firm has been registered to Japan’s Financial Services Agency since April of 2019, Decurret has been allowed to operate but may face more challenges in the future as new regulations may arise.
What is this law?
The Payment Services Act (PSA) and Financial Instruments and Exchange Act (FIEA) passed by the Japanese House of Representatives last year is beginning to be enforced next month. Though there is no official law to regulate crypto in Japan, the only way to legalize a digital asset is to amend existing regulations and have a legal status in Asian nations.
A. Classification of terminology is essential as PSA changes basic terminology from “virtual currency” to “crypto asset” so that the tightening of restrictions to crypto custodians can be classified.
B. Additionally, from May 1, 2020, the users of operating crypto exchanges should be managed separately from their own cash flows or by using a third-party operator to keep hold of the user’s money or by using other safe methods such as secured cold wallet storage.
C. In response to Mt. Gox hack that happened years ago which resulted in the loss of 850,000 BTC, if the exchange insists on using hot wallets, the company would have to hold the same quantities of crypto assets as their users so that in the event of theft, they can reimburse them properly.
You can read the full details of Japan’s revised law for cryptocurrency here.
“For foreign exchanges, Japan’s local regulations might not be conducive at the moment, still it was not a bad time to enter the crypto market in Japan”, the law firm alluded. The country is sometimes known as the wild west of finance -- it is believed that the regulatory measures will help make Japan stand out as a safe haven for crypto.
In this case, it is good to see progress from the crypto space despite the current situation worldwide where the economy as well is being affected due to pandemic issues. Blockchain on the other hand is a great tool to develop or pursue something that is useful for the community such as bringing secure payments and transactions on the go.
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