Japan Creates BitLicense Two
Japan Creates BitLicense Two.0 As Bitcoin Becomes a Legal Currency
Japan Creates BitLicense Two.0 As Bitcoin Becomes a Legal Currency
BitConnect was among the very very first websites online to break the story of Japan legalizing Bitcoin as a national currency last Spring. It was one of our most-read, very likely our most-read, articles to date, and for good reason. It was one of the Top twenty five stories of last year on Reddit, with ems of thousands of views and shares. Now, it is time for Bitcoin to go legally live in Japan, and the details are coming out on its regulatory thresholds. Less than good news to report, people.
How BitLicense Two.0 Works
I guess we should commence with the regulatory standard, or substandard, for Bitcoin governance which is Fresh York’s BitLicense, began in 2014, revised in 2015, and I have railed about it since Day One. Keeping it brief and sweet, if BitLicense’s aim was to keep Bitcoin businesses out of fresh York state, it was crafted professionally. After over two years of the books, only three corporations, none of them a petite company by any means, have obtained a license.
Circle, Ripple, and Coinbase just got one, two years later. Many critics see BitLicense as purely a way to protect the incumbent legacy banking industry from competition from digital currency industry, and that is how this is playing out. It is several hundreds of thousands of dollars to have the compliance, insurance, and legal strength to fulfill all their requirements. It can be $100k just to apply, after all, costs are considered, according to Bitstamp. This makes it so onerous that mid-size companies like ShapeShift, BitStamp, and LocalBitcoins to not do business in Fresh York at all. Maybe that was the point of BitLicense?
Forgive Japan if they are more than a little gunshy about the world of digital currency, but they do have a right to be skittish. Mt. Gox devolved into the largest Bitcoin scam in history, happening right in the center of Tokyo, and presently, there are pyramid schemes in the name of falsified digital coins that have cost Japanese investors at least $20 Million worth of Yen, recently. The lowly scammers are doing an excellent job of ruining a excellent thing for the rest of us. In 2017, the Bitcoin community will have to pay for the mistakes of the few.
Last year, the finer details on how bitcoin and its related businesses would be related were not made public, as they were not hashed out at that time, so all we had was the broad strokes of the legal agreement. Now, with the help of a blog post from Koji Higashi, the Co-Founder of IndieSquare, who is much closer to the situation providing the nations detailed plans, the adoption looks less like an adoption nd more like a sentence, at least if you intend to do any level of Bitcoin business, not so much the investment side
“Contrary to the popular narratives so far,” says Higashi, “I personally have serious doubt about this law being a long term positive for the Japanese community and it may even set a bad precedent for other areas of the world similar to how people in the community were worried about the Bitlicense.”
Why this will slow Bitcoin business growth
These are the reasons he is so pessimistic about the net effect on the Bitcoin community in Japan. Items required to even commence a business in this industry include a Obedience of a 3-year business plan, a detailed and approved organizational structure, join the government appointed industry association, implementation of an internal training program for compliance and virtual currency management, segregated fund management, frequent reporting to their national authority, outer audit KYC/AML requirements, required to gather customer information from all users even for $1 worth of trading. Then we’ll do the paperwork required….
“Overall, just in order to meet all the conditions above and become decently registered,” says Higashi, “it is estimated to cost around $300,000～$500,000 USD equivalent for the applicant(a rough estimation by a few experts that I have talked to). That’s for the initial registration and of course, the cost of staying compliant and submitting more paperwork as it scales can add up to potentially millions of dollars.”
Also, don’t expect to create a fresh altcoin anytime soon. “Only approved virtual currencies by the authority are considered legitimate and can be traded, sold or promoted to the public,” according to the letter of the law. So, in brief, if they haven’t heard of your coin before, you are not getting approved.
And all of these regulations apply to non-custodial businesses, meaning if the company never holds one coin for another person, never has control of another person's digital currency, but you are in this industry, you will have to hop through all these time-consuming and expensive legal hoops. Sound familiar?
Looks like it is going to do what it is intended to do, for now
In closing, what this level of regulation will do is prevent the legitimate youthful techie who is looking to innovate from ever getting began. What it will do is coddle the banking establishment, and protect them from a broad-scale attack of potentially dozens of innovative, niche digital currencies. How many bankers, lobbyists and lawyers, who are paid by the establishment, did it take to come up with these regulations? How much input and influence did the digital currency community have in these regulations?
Japan has basically copied Fresh York’s BitLicense and just added their spin on it. BitLicense has made a blueprint for protecting the legacy banking industry from competition, curtailing the innovations the digital currency industry can provide consumers, and liquidated any testbeds for discovering what these fresh technologies can and can’t do. If your digital currency, the blockchain, or business model is not overfunded, rock solid, and basically perfected, you will not get clearance in The Land of The Rising Sun. Mission accomplished.
If this can be done in two of the world's largest markets, Fresh York and Tokyo, how long before the rest of the world runs down this regulatory gasp point? Will this level of regulation force the digital currency ecosystem to evolve and become more stealth, as it can’t serve with this level of limitations by the agents of the establishment?
Do Fresh York and Japan truly think that overregulating this innovation will truly stifle fresh competitors and cut them off, in the long run? Or will they just create a larger black market they can't control at all in the years to come?
The establishment may win this legal battle they have created, but they may end up losing the war.
Author : Evander Brainy
Evander Clever worked for many years as a Wall Street banker, and has learned how the economy is self-destructing from the inwards. His travels, practice and research have led him to Bitcoin as the best way forward for the common man. He looks to spread the word on how Bitcoin can help anyone break the fetters of economic slavery being created by global establishment coerces. Evander gets you thinking about what money indeed is, and how it will work for you going forward. The world of finance is getting ready for incredible switches, and he is getting ready for what's coming next. Are you? Learn more about "The Future of Money" @ Bitcoin Movie University