The Need for a Crypto Regulatory Framework in Japan, Nikkei Asian Review’s Pesek Explains Why


It has recently been reported by William Pesek – from Nikkei Asian Review – that renowned Japanese investor, Masayoshi Son has lost $130 million of his own money due to investing in Bitcoin.

Also serving as the CEO of SoftBank Group, which is currently valued at $100 Billion, many are questioning his decision to enter the crypto sphere, amidst claiming that he has the nose for knowing which projects are surely to succeed in “10 or 20 years”.

Son’s first heavy investment was that of Alibaba, where his investment of $20 million in 2000 grew to $50 billion in 2014 when the firm went public. Other firms that he has since considered include Southeast Asia’s Grab and the popularly known Uber.

As per Pesek, Son is deemed Asia’s Warren Buffett and argues that Son’s loss could be due to his lack of understanding in cryptocurrencies – stating Buffett’s famous quote, “Never invest in something you do not understand.”

Japan: Crypto, Regulatory Frameworks and More

As countries around the world want to succeed and become the leader in any industry, especially that of technology, Japan too was making moves toward said goals. However, they have had difficulties, and examples of this include the Mt. Gox hack in 2014 and the more recent, Coincheck hack of 2018 (roughly $1 Billion loss at the time of hack).

This leads to the need to have a regulatory framework argues Pesek. Some of the cases made include confidence, which comes from providing assurances to investors, making sure that the digital asset-to-traditional money conversion is smooth, increased transparency and increased action taken against illegal activities, i.e. hacking and money laundering.

The country has gotten the Financial Services Agency to look into regulations and to further investigate the legitimacy of existing crypto exchanges. Pesek anticipates that a clear foundation to a potential regulatory framework will be announced sometime in June, which is the same time in which the G20 countries will be discussing crypto and blockchain technology.

As previously reported by Bitcoin Exchange Guide, Asian countries, including China, India, South Korea, Japan and Indonesia, will be regulating crypto, while highlighting the need to protect investors and seeing how the market impacts each country’s overall economy. In addition, Pesek quoted SankeiBiz, who have since noted that the G20 country, “can use the regulations, such as measures to prevent the outflow of virtual currency.”

Current Crypto Stance of Japan’s Neighbors

Interestingly, it has been noted that Japan cannot strive on its own and that other Asian countries’ involvement in crypto currency is essential. Here’s what Pesek elaborated upon:

“China’s aversion matters because, at bitcoin’s heyday, the mainland was home to nearly 90% of trades and roughly 70% of mining activity. For all its enthusiasm to become crypto-central, Japan lacks the scale to revive the market unilaterally. So, keeping China in the game is crucial.”

While Japan, Thailand and South Korea are leaning towards the acceptance of crypto-related services, it has been noted that the likes of China, and India are leaning more towards banning crypto – something to consider in terms of the overall Asian crypto participation.

Pesek ends his arguments by indicating that if a top shot investor like Son:

“Japan’s second-richest man, can stumble so spectacularly and quickly, bitcoin has a problem.”

This seems to be a contradiction to his original statement that if you don’t have knowledge then you shouldn’t be investing in it to begin with. This could be the case for Son.

Furthermore, big shots like Buffett himself have missed out on jackpots. Speaking of Buffett, who also happens to be the CEO of Berkshire Hathaway, he has always been wary of the crypto sphere – publicly sharing that:

“There is nothing being produced in the way of value from the asset.”

However, Buffett has been brought up in the past for having failed to predict the height that Google and Amazon have reached in today’s society. During the Berkshire Hathaway 2018 annual shareholder meeting, Buffett openly shared:

“I made the wrong decisions on Google and Amazon. I made the mistake in not being able to come to a conclusion where I really felt that the present prices that the prospects were far better than the prices indicated.”

Ultimately, one shouldn’t be reasoning that a regulatory framework needs to be place because “big shots” have lost big sums, but instead should look closely at the aforementioned hacks and scams that have occurred and its effect on the economy and its people.

What are your thoughts on some of the arguments made in relation to Japan and how the country needs to implement a regulatory framework? Let us know in the comments below.

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