From the onset of Bitcoin in 2008 and other Cryptocurrencies in the following years, the US Dollar has been the most preferred fiat pairing for BTC and other Cryptocurrencies. According to Coinhills, a Crypto evaluation, and data monitoring site, the Japanese Yen has replaced the US Dollar as the most traded fiat pair for Bitcoin.
Market Data Paints A Market Dominated By Two Fiat Currencies
According to the data provided by Coinhills, two fiat currencies are dominant while many are simply missing on the pairing preference. The Japanese Yen has a market share of 48.34%, and the US Dollar has a proportion of 43.77%. These two currencies have a combined share of 92.11%. On the other hand, there are other currencies that are increasingly being used in pairing Bitcoin such as the South Korean Won, and the Euro whose shares are at 6.08%, and 1.07% respectively.
There is also another leading fiat pair that has not been considered in the data collection following a government ban. This is the Chinese Yuan. China has been clamping down on Cryptocurrency exchanges and firms from September 2017 and there are no signs of any change of heart. For this reason, leading Cryptocurrency trading platforms such as Bitmain and Binance relocated leading to a decline in BTC/Renminbi pairings.
Japanese Yen Gained Prominence Due To Various Factors
BTC/Yuan pair was a leading trading option for Cryptocurrency investors prior to September 2018. The Chinese ban led to an outflux of these firms to neighboring countries such as Singapore, Japan, and South Korea where both locals and Chinese citizens could access trading services.
In particular, Japan netted the majority of Chinese investors who traded in Yen. Following the Coincheck security breach that led to a loss of $534 million worth of NEM. To avert a repeat of such a hazard, the Japan Financial Services Agency (FSA) tightened regulations. The FSA released a comprehensive and clear policy framework that gave Coincheck a new license and set new standards for Crypto-fiat transactions. This has given investors’ confidence in Japan-based Crypto firms and exchanges and this is fanning the growth of BTC/JPY pairing.
Additionally, the FSA standards of awarding trading approvals investigate business plans, security measures, and smart contract features. The information is collected in a 400-question questionnaire.
Lastly, the FSA has reduced Cryptocurrency capital gains taxes from 55% to 20%. Crypto-crypto payment and trading are tax-exempt and many firms are therefore able to grow their platforms.
US Dollar Is Losing Dominance, Why?
The popularity of BTC/JPY pairing raises the question of what factors may have contributed to the dislodging of the US Dollar from its top position. Although it may simply be the preference of the ease of converting the Yen to BTC and vice versa in Crypto exchange Fiat deposits and withdrawals, there are other underlying issues. The most outstanding one is the stringent US Federal laws that are not only restrictive of USD-Crypto trading but also harsh on non-USA Blockchain platforms that trade in BTC.
Additionally, although President Donald Trump has been working hard to make the US Dollar prominent in everything including Cryptocurrency markets, the US SEC and CFTC are falling behind in creating policies that foster the growth of Crypto-fiat transactions and payments like the FSA.