Tokyo Financial Exchange Takes First Step Toward Bitcoin Futures

  • Working group planned to start analyzing bitcoin in January
  • Legislation would be needed for Japan to copy U.S. moves

Bitcoin: What’s Coming in the Year Ahead

One of Japan’s leading financial exchanges is starting preparations to launch bitcoin derivatives, echoing U.S. rivals that plan to list contracts tracking the cryptocurrency as soon as this month.

Tokyo Financial Exchange Inc., which counts JPMorgan Chase & Co. and Barclays Bank Plc among its trading participants, plans to create a working group to study cryptocurrencies in January, Chief Executive Officer Shozo Ohta told reporters late last week. The listing would require changes to the nation’s securities law, he said. In Japan, the start of a working group is typically the first step toward drafting legislation.

“Once the Financial Instruments and Exchange Act recognizes cryptocurrencies as financial products, we will list the futures as quickly as possible,” Ohta told reporters Dec. 1. “To achieve that, we will launch this working group to study various aspects, including bitcoin’s present status, its outlook, and what form it will take root in Japan’s society.”

One consequence of futures contracts is they’ll allow investors to bet against bitcoin -- read more about that here.

The bourse, known as TFX, is independent of the nation’s main trading venue, the Japan Exchange Group Inc. that handles Nikkei 225 and Topix futures. TFX is used by institutional investors for Euroyen interest-rate futures, and is also used for currency and equity-index futures. Across all products, 3.5 million contracts were traded in November, according to its website.

In April, Japan became one of the fastest-moving countries to roll out laws for cryptocurrencies, recognizing bitcoin as a legal means of exchange and enacting oversight of bitcoin exchanges. To date, 15 venues have received licenses from the Financial Securities Agency. Japanese exchanges by some estimates account for roughly half of global bitcoin trading volume, boosted by an unusual business model that doesn’t charge trading fees.

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