SFD system introduced in bitFlyer’s Lightning FX is being tossed about
Hello everyone, this is SFD! My sense of trading has gotten a bit skewed again@xi10jun1.
Bitcoin seems to be recovering, but on bitFlyer Lightning FX it has stretched toward around 1.5 million yen.
Meanwhile, the NEM I bought isn’t returning to the 100-yen range…
※This column is designed so half of it can be read for free, a mark of good conscience. Of course, if you read up to the paid portion (updated weekly for 400 yen per month, so about 80–100 yen per column), I would be very encouraged, and I’d be happy if you subscribe as a tip-based support!
This week’s results (Feb 16, 2018 to Feb 22, 2018)
First as always, the results. I’ll present the changes first.
- Last week (through Feb 15, 2018): assets 62,218 yen
- This week (through Feb 22, 2018): assets 62,218 yen
- Change: +0 yen
This week I abstained from trading. The reason will be described later, due to SFD.
Regarding the current SFD system, I’ve looked at expert tweets and blogs, but it doesn’t seem to have a good reputation.
So this time I’ll write about the SFD system.
What is the SFD system?
The SFD (Swap For Difference) system is a bitFlyer mechanism introduced to narrow the price gap between the spot BTC/JPY and Lightning FX. When you open a position in the direction of the gap, you incur an SFD according to the gap rate (a penalty), and if in the opposite direction, you receive an SFD (a bonus).
For details, go to the official page →Fees and Taxes - Buying/Selling/Trading Bitcoin on bitFlyer
The SFD calculation formula is “SFD (yen) = Trade quantity × Lightning FX price × SFD rate.”
The price gap is as follows.
- Gap 10% to less than 15%: SFD rate 0.5%
- Gap 15% to less than 20%: SFD rate 1.0%
- Gap 20% or more: SFD rate 3.0%
For example, if the spot is 1 BTC = 1,000,000 yen and Lightning FX is 1 BTC = 1,100,000 yen, the gap rate is 10%, so the SFD rate is 0.5%.
Now if Person A takes a buy position on Lightning FX at 1 BTC = 1,100,000 yen, it becomes this.
1 BTC × 1,100,000 × 0.5% = 5,500 yen
Trades require a counterparty, so if A’s counterparty is B, it becomes this.
- A (buyer): SFD charged 5,500 yen
- B (seller): SFD granted 5,500 yen
Conversely, if the spot is 1 BTC = 1,000,000 yen and Lightning FX is 1 BTC = 900,000 yen, the same 10% gap results in an SFD rate of 0.5%.
Now if Person A takes a sell position on Lightning FX at 1 BTC = 900,000 yen, it becomes this.
1 BTC × 900,000 × 0.5% = 4,500 yen
Similarly, with B as the counterparty, it looks like this.
- A (seller): SFD charged 4,500 yen
- B (buyer): SFD granted 4,500 yen
In other words, “the water on this side (where the gap narrows) is sweet (SFD granted), while the water on that side (where the price gap widens) is bitter (SFD charged).”
However, a problem arose: a method to buy with a gap less than 10% and sell with a gap 10% or more (SFD granted) was created, which would not correct the price gap but rather exacerbate it.
That was odd, so I held off on trading this week, since bitFlyer hadn’t said anything about it yet and I didn’t know how prices would move once they did.
Free summary: SFD is headed for a rule change
Therefore this week, selling positions became less favorable than buying positions, and BTC in Lightning FX jumped. It took time this week to understand this movement.
And as I was editing this column, I received notice from bitFlyer that they are considering changing the SFD system, and Lightning FX prices fell sharply.
I’ll probably skip trading again this week.
So in this paid column I’ll discuss future outlook.
Ending Corner 1: Latest information on taxes! Updated Feb 9, 2018!
The National Tax Agency site has updated the latest legal views on Bitcoin.
Here it is →No.1524 Taxation on profits from Bitcoin use | Income Tax | National Tax Agency
Addendum dated 2017-12-01: A document on how to calculate income has been posted on the National Tax Agency site.
Here it is →Calculation methods for income related to virtual currencies, etc. (pdf) | National Tax Agency
※ Laws and tax interpretations may continue to change, so filing taxes could change. Before filing, be sure to check with your nearest tax office or a tax professional.
Addendum dated Feb 9, 2018: Services that assist with computing virtual currency taxes are appearing in various places. bitFlyer released that by using a service called CRYPTACT, you can calculate profits from your trading history.
bitFlyer release →Notice about the renewal of "Your Transaction Report" and taxes related to Bitcoin and other virtual currencies (pdf)
CRYPTACT here →https://tax.cryptact.com/
CRYPTACT is free to use and supports 15 exchanges (domestic: bitFlyer, Zaif, bitbank, coincheck, GMO Coin; international: binance, bitfinex, bittrex, changelly, CoinExchange, cryptopia, HitBTC, kraken, poloniex, Quoine) and 1,680 cryptocurrencies, enabling tax calculation across multiple companies.
However, as noted in bitFlyer’s release, the responsibility for final tax filing rests entirely with the user; the exchange operators, Cryptact, EY Tax Advisory, and I themselves bear no responsibility. Please perform your tax filing at your own risk.
Ending Corner 2: In planning
I’m thinking of writing about new cryptocurrency-related news and information soon, but I haven’t come up with anything yet. I’ll post it here as soon as a plan is decided!
※ The free portion ends here. The rest is detailed analysis and outlook, so it will be paid. If you want to read more, of course, you can subscribe as a tip-based support—it would be very encouraging. Thank you for your continued support!
