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Earlier today, on September 29, the price of bitcoin and Ethereum declined by nearly three percent and seven percent respectively due to the South Korean government’s ban on domestic initial coin offerings (ICOs).
Cryptocoinsnews reported that the South Korean Financial Services Commision (FSC) officially announced its short-term plans of banning “all forms” of ICOs that are conducted by companies within South Korea. While there still is confusion in the South Korean community in regards to the statement of the FSC, at this stage, local investors are still allowed to invest in foreign ICOs.
Bitcoin and Ethereum Price Recover Swiftly Due to Japan
Japan has evolved into a powerhouse in the global bitcoin and cryptocurrency markets. The country’s largest electronics retailers, airlines, hotels, and store chains have already integrated bitcoin as a payment method and have used the cryptocurrency for many months. In terms of mainstream adoption, no other region in the world comes close to Japan.
Today, the Japanese and its financial regulator the Financial Services Agency (FSA) authorized and licensed 11 cryptocurrency exchanges in Japan including BitFlyer, BitBank, Zaif, Quoine. CnLedger, a trusted source of cryptocurrency news in the Asian market, shared the official government document.
Subsequently, the bitcoin price increased from around $4,050 to $4,200, triggered by the approval of cryptocurrency exchange by Japan’s FSA. There still was confusion and uncertainty within the global bitcoin exchange market because of the nationwide cryptocurrency exchange ban imposed by the Chinese government. Many traders and investors have continued to express their concerns over other major markets such as Japan and China, as the imposition of cryptocurrency exchange ban by any of those two markets would likely cause a massive market sell-off.
But, the Japanese government took a fundamentally different approach in contrast to the Chinese financial regulators. Instead of allowing bitcoin and cryptocurrency trades to flow into unregulated over-the-counter (OTC) and peer-to-peer (P2P) markets, the Japanese government came to a realization that the better method of handling the cryptocurrency market is by regulating the market and legalizing trading platforms to protect investors.
In the upcoming months, it is highly likely that the majority of trading volumes in the Chinese cryptocurrency exchange market will be redirected to Japan. Since South Korean financial regulators aim to impose stricter Know Your Customer (KYC) and Anti-Money Laundering (AML) policies in the near future, and also allow residents with verified identity to own one cryptocurrency trading account per individual, it will be increasingly difficult for foreigners to launch cryptocurrency exchange accounts in South Korea.
Will Japan Become a Major Market For Ethereum?
Still, Japan is not a major market for Ethereum. South Korea remains as the largest exchange market for Ethereum with over 33 percent in market share, followed by the US and Europe. The Japanese cryptocurrency exchange market is heavily concentrated around bitcoin and other cryptocurrencies that have partnered with local financial institutions such as Ripple. But, as more traders move to the Japanese market primarily due to friendly and efficient regulations for cryptocurrency businesses and investors, it is likely that Japan would evolve into a major market for Ethereum.
Featured image from Shutterstock.
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