Crypto exchange FTX filed for Chapter 11 bankruptcy in the US on Friday, Nov 11. In just 72 hours after FTX’s crisis came to light, traders reportedly withdrew $6 billion from FTX.
About 130 companies are subject to this bankruptcy filing, including exchanges FTX Japan, FTX US, and Alameda Research. The collapse file profile crypto giant brought an enormous impact on the global cryptocurrency market. However, as much or even more affected than India is the far eastern financial center, Japan.
Despite its general impression of its innovativeness in terms of technology and culture, Japan has always been a conservative market with a strong tendency to avoid risks. Cash is still widely used in most situations in daily life compared to any online payment methods, and physical paper copies are often required for official situations, where we see that they find value in things in a tangible form and prefer them to anything digital.
With such a nature, there is strong skepticism towards cryptocurrency, which in Japanese the term virtual currency is more often used. And 7 years after the Mt Gox hack, another shocking news on cryptocurrency realized again the fear towards the risk of owning anything virtual.
Cryptocurrency’s Growing Presence in Japanese iGaming
The use of cryptocurrencies in Japan, perhaps like many other markets, is for investment purposes. On the other hand, iGaming such as online casinos can be one of the scenes where it is used daily.
Gambling, such as horse racing and pachinko, is one of the most popular pastimes in Japan. But unlike India, it is currently illegal to operate gambling sites, both online and offline, within Japan, with special exceptions for some publicly run gambling. As a result, online casinos that can be accessed from Japan are operated outside of Japan, such as in Malta and Curacao.
Until now, payment methods such as credit cards, bank transfers, and e-wallets have been the mainstream on these iGaming sites, but in recent years, more and more online casinos started accepting not only Bitcoin but also major cryptocurrencies such as Ethereum and Litecoin.
Benefits of Using Cryptocurrencies on Online Casinos
There are many advantages for users who use cryptocurrencies at iGaming sites. For example, withdrawals from online casinos are often faster than other transaction methods, and there are often no or little processing fees charged for depositing and withdrawing when using cryptocurrencies, which could be different for other methods.
On the other hand, iGaming sites often require the submission of identification documents at the time of withdrawals, which is part of the KYC (know-your-customer) policy commonly seen amongst such operators.
By this, users are required to provide personal information such as legal names, date of birth, home address and phone number, and so on, making it impossible to provide false information to the operators.
Japan’s Anonymous Society
Another known advantage of cryptocurrencies was that crypto users are often exempt from such KYC policies, meaning that they dont have to submit identification documents. As previously mentioned, in addition to the complicated legal situation surrounding gambling, there is also a sense of distrust in Japanese society in providing personal information and assets in visual spaces.
With the increasing recognition and spread of cryptocurrency, it has become one of the major payment methods for iGaming. But with FTX’s bankruptcy, Japan once again witnessed one aspect of the vulnerability of the technology.
It is not the first time, though, that crypto exchanges were shut. Nonetheless, FTX is arguably the largest scale of the kind. In the US, the authorities were reported to have begun investigating FTX in NY state, and this impact is expected to continue.