Bitcoin corporate bond makes debut in Japan

A unit of financial information provider Fisco issued three-year debt worth 200 bitcoins to another firm in the Fisco group last Thursday.
A unit of financial information provider Fisco issued three-year debt worth 200 bitcoins to another firm in the Fisco group last Thursday.PHOTO: REUTERS

Fisco banking on the digital currency becoming a legally recognised financial asset

TOKYO • Japan's Fisco is experimenting with selling bonds denominated in bitcoins, figuring the digital currency will eventually become a legally recognised financial asset in Japan and help boost its business.

A unit of the financial information provider issued three-year debt worth 200 bitcoins to another firm in the Fisco group last Thursday, in what likely is the first such deal in Japan, said Mr Masayuki Tashiro, the firm's chief product officer.

One goal of the sale was to test the bonds' potential to become a useful fundraising tool, he said.

The notes issued were worth about US$813,000 (S$1.1 million) as of Wednesday.

The experiment is another example of how firms and investors worldwide are looking for ways to make money out of bitcoin. Some investors have turned to digital currencies as a haven asset as tensions between the United States and North Korea escalate. Japan, where regulators have made more progress than other nations in crafting cryptocurrency laws, is becoming a hub for blockchain experimentation.

"We expect that bitcoin will eventually be recognised as a financial product" under local law governing financial instruments, Mr Tashiro said. If that happens and issuance of cryptocurrency debt takes off, "if we play a role of arranger, we could earn fees", he said.

Prime Minister Shinzo Abe's government on April 1 legalised cryptocurrencies as a form of payment and placed rules around audits and security. In July, regulators began allowing bitcoin purchases to be exempt from the nation's 8 per cent sales tax, putting them on similar footing with financial products like stocks and bonds.

The legal clarity has given Japanese companies a green light to experiment with blockchain products.

Electronics retailer Bic Camera now accepts bitcoin as payment at certain stores, while Peach Aviation plans to begin accepting it to book flights later this year.

In finance, SBI Holdings last month began using a blockchain for currency remittance, while Sumitomo Mitsui Financial Group joined a consortium of firms that plan to use the technology for settlements.

Bitcoin surged past US$4,000 this week on increasing optimism that faster transaction times will hasten the spread of the digital currency. The currency was at US$4,362 yesterday in Asia, according to Bloomberg-compiled data.

Fisco designed the bond like a regular corporate note so it could satisfy regulatory requirements. The debt pays a 3 per cent coupon and gives the holder 200 bitcoins back when it matures, according to a press release. Fisco may experiment further with such debt, Mr Tashiro said.

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A version of this article appeared in the print edition of The Straits Times on August 18, 2017, with the headline 'Bitcoin corporate bond makes debut in Japan'. Print Edition | Subscribe