Japan and Bitcoin: Does life without fiat exist?
Japan became one of the first developed countries to recognize cryptocurrencies as a legal payment method on an equal footing with the Japanese yen. Can you live without fiat money in Japan?
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Once you arrive at Japan's airport, you can immediately see the mass adoption of cryptocurrencies among the people of this country. Restaurants and cafes accept Bitcoin as payment alongside the yen. You can pay with crypto for a taxi, hotel bookings, shopping malls, major tech retailers, online stores, and utility bills. Even small private stores paste stickers at their entrance with an inscription “Bitcoin Accepted Here”.
A sign at the entrance of the store showing they accept Bitcoin payments
Bic Camera cash desks that accept Bitcoin payments
Cryptocurrencies in Japan became widely popular in 2014, after the launch of crypto exchange Coincheck. This platform enabled users not only to exchange crypto assets for fiat currencies, but also to simply and quickly open crypto wallets. Subsequently, a new eCommerce service, Coincheck for EC, aimed directly at the e-commerce industry was launched on September 14. This service attracted both big chains and small retailers.
Bitcoin loyalty program advertising
By 2017, public perception and trust in cryptocurrencies had become so great that digital assets such as Bitcoin and Ethereum were granted payment status in Japan on an equal footing with the Japanese yen. This decision was enshrined in a currency regulation law and adopted by Japan's parliament. Cryptocurrencies have never before enjoyed this level of government support in any country.
A well-known investor in bitcoin-related startups Roger Ver, who left the U.S. and moved to Japan, described Tokyo as “the most bitcoin-friendly city in the world”.
In late 2017, Japanese retail giants Bic Camera (electronics retailer) and Meganesuper (optics manufacturer) also boosted Bitcoin popularity by starting to accept BTC in their stores nationwide. Bic Camera owned a chain of more than 40 supermarkets, while Meganesuper had more than 330 retail stores.
Crypto mass adoption was also facilitated by Recruit Lifestyle's feature that enabled large businesses to accept bitcoin payments via its “Mobile Payment for Air Regi” POS app. Recruit Lifestyle teamed up with Coincheck to bring this service to the market. This cooperation allowed the Meganesuper network and about 300 thousand merchants and retailers across Japan to expand the list of payment instruments and start accepting Bitcoin. This fact encouraged Japanese citizens not only to hold money in Japanese yen, but also to buy cryptocurrency.
Today, prepaid e-money cards enable you to pay with cryptocurrency in a few thousand small stores 24/7 across the country. Major market players, including e-commerce giants, chat-app operators, and large banking groups, tend to partner with major crypto exchanges or market their own trading platforms to offer cryptocurrency and financial services to their customers via X-sale (cross-selling).
While in 2015 Japan's total amount of cryptocurrency spending amounted to 185 billion yen ($1.67 billion, according to the Fuji Chimera Research Institute), this figure has increased almost 10 times in five years. The most promising area is considered to be the mobile payment market in online stores.
Even real estate can be purchased for cryptocurrency in Japan. Since 2018, Japanese startup Yitanzi has been selling real estate objects, including shopping malls, for Bitcoin.
Later, various retail chains and stores in Japan started integrating crypto payments into their loyalty programs. Rakuten, one of Japan's largest online retailers, introduced branded credit cards in 2021, allowing customers to earn rewards in a virtual account. The cards could be linked to both a yen account and a Rakuten Wallet supporting crypto assets. Virtual points could be used alongside “real money” to buy goods at the Rakuten online store or to pay for any services, including utility bills.
The Bank of Japan (the country's national bank and financial market regulator) believes that cryptocurrencies, in particular stablecoins, will help address the country's excessive dependence on cash, which is the most widespread and expensive form of payment in terms of production costs. This may sound strange, but in such a technologically advanced country as Japan, cash is still the most popular payment method. The Japan Times estimated that in 2019, cashless payments were just 27% of total transactions, with the rest being made in cash bills and coins. The coronavirus pandemic and the broader perception of contactless payments led to a marked increase in online purchases and eventually began to shift that balance toward cashless payments, including cryptocurrencies.
Japan hosts more than 30 crypto exchanges. They do not offer many assets, focusing mostly on 12-15 most popular coins traded with the Japanese yen. Bitcoin remains the most popular asset in the country.
In 2018, the Bank of Japan started exploring the stablecoin market, and the CBDC (the central bank's digital currency) projects of other countries. As a result, Japan announced its plans to launch its own CBDC, the digital yen. In 2020, they developed the project’s roadmap and created a working group. A little earlier, the country revised regulations related, among other things, to cryptocurrencies, namely the Payment Services Act and the Financial Instruments Act.
Digital money has gained legal status in Japan since 2021. However, cryptocurrencies are no longer used as a means of payment. According to the country's law, digital money is defined as crypto assets and:
• can be used as a payment method;
• can be freely exchanged for fiat currency (e.g., Japanese yen, U.S. dollars);
• hold electronically recorded transferable rights (ERTRs);
• are not fiat money or assets denominated in national currency.
In fact, the crypto asset definition in Japan now comprises Bitcoin, Ethereum and other cryptocurrencies.
Japan continues to take steps against anonymous cryptocurrencies. Monero, ZCash, and Dash have captured the regulators' attention for being used by cyber criminals. As a result, Japan's Financial Services Agency (FSA) banned privacy-oriented cryptocurrencies from June 18, 2018. After that, all Japanese exchanges removed support for Monero, Dash, Augur, and ZCash.
On November 23, 2022, the Bank of Japan announced its plans to roll out a pilot program for the national digital currency (CBDC) in spring 2023.
Japan enables people to make crypto payments almost everywhere, with Ethereum and Bitcoin being two of the most popular cryptocurrencies today. Even vending machines accept them as payment. Of course, digital assets haven’t occupied all the economy and goods/services sectors yet, but this is a brilliant example of crypto mass adoption in one country.
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