Bitcoin Could Tap into $40 Trillion Japanese FX Margin Trading Market This Year
Companies in Japan are reportedly scrambling to register with the Japanese Financial Services Agency (FSA) to offer bitcoin products or services. They aim to attract Japanese retail investors, also known as “Mrs Watanabe”, who currently favor the $40 trillion foreign exchange margin trading market. Also read: Petition Asks SEC to Clarify Rules on Bitcoin and Digital […]
Companies in Japan are reportedly scrambling to register with the Japanese Financial Services Agency (FSA) to offer bitcoin products or services. They aim to attract Japanese retail investors, also known as “Mrs Watanabe”, who currently favor the $40 trillion foreign exchange margin trading market.
The Stampede to Register Bitcoin Businesses
Since the Japanese government started recognizing bitcoin as a method of payment on April 1, online exchanges, funds and remittance companies have been racing to formally register with the FSA. “The process is expensive, demanding, laced with invisible tripwires and not all applicants, by any means, will be successful,” the Financial Times reports, adding that “the prize, though, could be spectacular.”
By October 1, any bitcoin exchanges or money transfer businesses wanting to operate in Japan must be registered with the FSA and be submitted to annual audits. They have to comply with many new rules such as having extensive know-your-customer (KYC) processes and separate customers funds from their owns.
Untapped $40 Trillion Market
Once registered with the FSA, these companies will be able to offer their bitcoin services and products to Japanese retail investors which largely comprise of Mrs Watanabe. The term Mrs Watanabe refers to Japanese retail investors, originally housewives trading online at home. They are historically risk-averse but now favor FX margin trading. Over the past decade, they have become a big player in currency trading to combat low-interest rates in Japan.
According to a survey in April 2016 by the Bank of Japan which was published in September last year, the average daily turnover of the Japanese foreign exchange market was $399 billion. This translates to roughly $145 trillion annually.
The Financial Times claims that the volume of FX margin trading in Japan is about $10 trillion per quarter which is approximately $40 trillion annually. The publication further notes:
A minute fraction of that [FX margin trading market] channelled towards the bitcoin market, say the most excitable proponents, could be transformational.
Mrs Watanabe has largely stayed away from bitcoin, opting for investments that are easier to understand. However, by recognizing bitcoin, the Japanese government has effectively demystified the digital currency. “Seeing the stamp of a regulator known for its conservatism” makes bitcoin attractive to Mrs Watanabe who may feel that the decentralized currency “is simply too lucrative a bet to pass up,” the publication asserts.
While regulating bitcoin may be seen as an assertion of control by the Japanese government, Mike Kayamori, CEO of the bitcoin exchange Quoine, suggests there may be benefits this time, citing:
The retail investor — Mrs Watanabe — doesn’t want the wild, wild west, she wants something regulated and trustworthy.
Do you think “Mrs Watanabe” will start investing in bitcoin soon? Let us know in the comments section below.
Images courtesy of Shutterstock and Japanese FSA
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