These two countries are loving Bitcoin!
Bitcoin has truly become one of the most influential digital currencies worldwide, and countries have been using it now just like how they’re using their local currency.
Japan and South Korea has been two of the many countries that had truly embraced Bitcoin. It is widely used in both countries, and merchants are welcome to use it for business.
Concerns over the low saving rates in Japan and South Korea, the citizens of the two countries are investing more in bitcoin. Comparing to the average 17 percent gain of Asian stocks in 2017, the value of the cryptocurrency increased by 124 percent over the same period (after a 125 percent gain in 2016). Just in May alone, BTC had seen a 60 percent increase during the month.
After a crackdown at China’s Central Bank earlier this year, more investors in Japan and South Korea turned to the cryptocurrency. According to the media publication Reuters, the increased Japanese and Korean investment had an impact on bitcoin’s surge in 2017.
Bitcoin exchanges in the two Asian countries are saying they had experienced higher interest in the cryptocurrency over the last two weeks. One reason could be that Japan accepted a bill in April officially recognizing digital currencies, including bitcoin, as real money. Due to strict money-laundering rules, which make it hard for investors to move the cryptocurrency in and out, BTC trades at premium in both countries. While, for example, on May 25, the global average bitcoin price was $2,514, the digital currency was traded on $3,800 in South Korea with a 33.5 percent premium.
“After I first heard about the bitcoin scheme, I was so excited I couldn’t sleep. It’s like buying a dream. Everyone says we can’t rely on Japanese pensions anymore. This worries me, so I started bitcoins,” Mutsuko Higo, a 55-year-old Japanese social insurance and labor consultant said. Higo bought around 200,000 yen ($1800) worth of bitcoin in March to supplement her retirement savings.
Asia is one of the main supporters of the cryptocurrency with the booming investment culture in the region, where it is common to swap investment tips. According to a ranking by CoinMarketCap, China, Japan, and South Korea are home to several high traffic cryptocurrency exchanges.
Since bitcoin is mostly unregulated in Asia and the laws for the exchanges are uneven, there is a significant risk associated with the trade of the cryptocurrency. For example, in Hong Kong, BTC exchanges operate under money service operator licenses. On the other hand, in South Korea, the regulation for exchanges is similar to online stores, trading physical goods. However, South Korea is planning to introduce regulations on the digital currency in 2017.
Since in most Asian countries, there are no rules for investor protection, the rise of bitcoin’s popularity attracts an increasing number of scammers. South Korean authorities reported they had busted the members of a pyramid scheme, which gained approximately $55 million scamming thousands of victims. Because of the lack of regulations, India also sees the number of such pyramid schemes rising in the country.
Leonhard Weese, president of the Bitcoin Association of Hong Kong, who is also a bitcoin investor himself, warned bitcoin investors about the potential risks associated to the cryptocurrency:
“Trading carries huge risk: there is no investor protection and plenty of market manipulation and insider trading. Some of the exchanges cannot be trusted in my opinion.”
To increase trust and user protection, some of the larger exchanges implemented security measures and compensation guarantees. However, numerous small cryptocurrency exchanges are operating with almost no supervision. Learning from the MtGox fraud in 2014, the Financial Services Agency (FSA) in Japan closely supervises exchanges, but not investors or traders.
“The government is not guaranteeing the value of cryptocurrencies. We are asking for bitcoin exchanges to fully explain the risk of sharp price moves,” an FSA official said.