[English] Right now! Enactment of the Virtual Currency Act—the impact of misguided policy on Coinbase customers in Hawaii

In no time, March has entered its late stages. The enforcement of the Virtual Currency Act (amended Payment Services Act) should be around, right? There are rumors it might be around April 3.→ The enforcement of the Virtual Currency Act is on Saturday, April 1, 2017 (Heisei 29)

Unlicensed exchanges are illegal

After the amendment, domestic exchanges that have not obtained authorization willoperate illegally in Japan(as sales agents for coins, etc., being unlicensed is also expected to become illegal).

Similarly, overseas exchanges would operate illegally without authorization, but this is expected to remain a warning to “obtain authorization from the Financial Services Agency of Japan,” as with overseas FX brokers, and Japanese users would not be illegal to use (even if it were illegal, penalties seem unlikely) and it may become a matter of complete personal responsibility.

However, it is completely unknown how overseas exchanges will respond to Japanese users.

Whitelisted cryptocurrencies will be handled

Also, cryptocurrencies handled must be whitelisted in accordance with the guidelines; otherwise, handling will be NG. This suggests thatthe domestic demand and supply for coins handled by authorized exchanges may riseand Japan, being a trading nation, draws overseas attention as to which coins will enter the whitelist.

Concretely, BTC and ETH are expected to be accommodated as usual,Zaifhandles NEM (XEM) and MonaCoin (MONA) as major currencies, and coins like Counterparty (XCP) in the “token” category,coincheckhandles Ripple (XRP) and Factom (FCT), as well as Augur (REP), an Ethereum Dapp (decentralized application), Monero (XMR) and Zcash (ZEC) for anonymity, and in the miner category, Ether Classic (ETC) and Lisk (LSK) may also attract attention.

If one sees this as an opportunity, holding these currencies in real or physical form is not out of the question. From a personal viewpoint, among the above, in the long termNEM (XEM)appears to be the most favorable, and the question of whether anonymous coins can be authorized is delicate, butMonero (XMR)andZcash (ZEC)are also considered potentially good options.

Which will be authorized or not, and if authorized, how quickly, is completely unknown, so this is just for reference.

What about currencies that didn’t make the whitelist?

So what happens to cryptocurrencies that aren’t whitelisted?

They themselves do not become“illegal cryptocurrencies”seems to be the case. Personally, I interpret that exchanges handling unapproved coins and agents that sell them would become illegal… while individuals buying, selling, or holding such coins themselves would not be illegal.

It wouldn’t make sense to criminalize a project with great potential merely because Japan hasn’t granted authorization, would it (lol). After all, value and its criteria should be based on where value exists, not centralized government control.

One way to trade unapproved coins is like this.

For example, even if a coin called XXX is non-authorized domestically, you could buy authorized coins like BTC with Japanese yen on domestic exchanges, send them to overseas exchanges, and then buy XXX with those funds. If you want to convert back to yen, you do the reverse. This flow remains quite common even now.

Could this even lead to this kind of situation?

One concern is: if non-authorized overseas exchanges are illegal, what happens to the ability to send coins from domestic exchanges to overseas exchanges (their addresses)?

That should be left to users’ freedom! (lol) In truth, there is a fear that there could soon be a “untransmittable list” where sending to certain overseas exchanges’ addresses might be blocked. However, even if that happened,you could just go through another address!That is easy to imagine.

(This amended law also seems to aim to protect consumers by eradicating the spread of fraudulent or deceptive cryptocurrency sales and solicitations. In fact, there are many inquiries at consumer consultation centers.)

Well then, domestically it feels like that, but Japan is not the only country facing regulatory upheaval. This time, about a month ago, here is a translated article about another country’s experiences.

Now, please proceed.

The impact of misguided policy on Coinbase customers in Hawaii

After five years of smooth operation and significant growth, Coinbase has earned its status as one of the most trusted digital currency-related companies. Our success has been largely due to providing safe services in as many compliant jurisdictions as possible.

Unfortunately, in Hawaii, providing services seems likely to become difficult in the future. Hawaii customers have the right to know why.

The Hawaii Department of Commerce and Consumer Affairs (DFI) announced that digital currency businesses operating in Hawaii will be required to obtain licenses under Hawaii’s money transfer laws.

Coinbase does not object to this policy. In fact, Coinbase currently holds money transmission licenses in 38 U.S. states and submitted a comprehensive application for licensing in Hawaii in 2014.