Japan says "no" to contracts for cryptocurrencies

14.01.2019 10:38 | Bartosz Grejner

"The Japanese financial regulator is against the introduction of cryptocurrency derivatives. This will be another setback for those virtual currencies, which are unable to break out of the downward trend observed throughout 2018," writes Bartosz Grejner, Conotoxia Analyst.

According to the news agency Bloomberg, the Financial Services Agency (FSA), the financial supervisor in Japan, will not allow introduction of derivatives, such as futures and options contracts. These instruments have been already listed on markets in, among others, the USA since the end of 2017. However, Japan is one of the world's largest cryptocurrency markets, and this action may prove to be yet another reason that will prevent the cryptocurrencies from rebounding the significant price drops they incurred in 2018.

Loss of about 500 million USD - Japan remembers

As Bloomberg reports the FSA decision is a result of last year's hacking attack on the Japanese stock exchange Coincheck, from which 500 million USD was stolen in the past year. After that, the FSA has introduced more regulation on most ICOs, which are now within the scope of rights concerning securities, and has also limited the leverage that exchanges can offer on cryptocurrencies.

As a promising sign may be the fact that the FSA treats ETFs differently from futures and options, estimating that the launch of such derivatives could contribute to increased price speculation. ETFs are characterised by, among other things, the fact that they track the prices of their assets, which could be also cryptocurrencies. However, these products still remain elusive to the cryptocurrency market and attempts to introduce them in the US or the EU have so far failed.

Everybody is waiting?

Their launch in the US, the EU or Japan could increase the interest of large institutional investors, whose exposure to cryptocurrencies remains minimal at best. They act similarly as many central banks do with regard to interest rates - implementing the "wait and see" approach.

But the problem lies in the fact that the cryptocurrency market also awaits the increased interest of the aforementioned institutions. In such conditions, it is hard to meet the expectations of both parties, which is clearly reflected in the downward spiral that we have been witnessing for a year now. The beginning of 2019 indicates that this negative trend will continue into Q1, with only a relatively small rebounds in sight, as the prospect of fundamental changes in the cryptocurrency market is limited in the coming months.

The introduction of ETFs in Japan could be the positive signal expected by many market participants, but one has to be realistic. This hasn’t been done so far in major markets, despite repeated attempts in the US, and the Japanese received a serious incentive (in the form of a stolen 500 million USD) to be extremely cautious in their further actions concerning cryptocurrencies. Japanese ETFs should rather be considered in the realm of dreams, with little chance of their realisation.


See also:

07.01.2019 | 14:22

Prices of over 300 cryptocurrencies manipulated

"Users of two social networks influenced the prices of over 300 cryptocurrencies, including bitco...

28.12.2018 | 14:36

How much will be bitcoin worth in 2019?

"This year's price drops on the cryptocurrency market significantly reduced bitcoin's price. Curr...

24.12.2018 | 13:57

Will Facebook wipe out cryptocurrencies? Bitcoin gained, for now

"Facebook will implement its own cryptocurrency. It may sound strange because Facebook banned ads...

17.12.2018 | 15:45

Impulse from the US upon the bitcoin record anniversary

"Exactly a year ago bitcoin cost 20 thousand USD. It fell from the record-breaking level and toda...

Start chat