Japan’s First Bitcoin Corporate Bond
The Tokyo-based financial information provider Fisco Ltd announced this week that it has issued Japan’s first bitcoin-denominated, unsecured corporate bond. The three-year bond worth 200 bitcoins was issued to another firm in the group on August 10 as an experiment to test the bond’s potential to become a useful fundraising tool.
Fisco Ltd was founded in 1995 and is listed on Jasdaq. The company launched a bitcoin exchange in April 2016, called the Fisco Cryptocurrency Exchange, which is the bond’s issuer. The bond pays a 3 percent coupon and gives the holder 200 bitcoins back when it matures on August 10, 2022.
This bond was structured to have similar properties to corporate bonds. Masayuki Tashiro, the company’s chief product officer, explained, as reported by Bloomberg:
Fisco designed the bond like a regular corporate note so it could satisfy regulatory requirements.
However, the legal status of Fisco’s bitcoin bond is unclear, according to Nikkei. “Under the corporate law, bonds issued in money such as yen and dollars are defined as corporate bonds,” the publication explained. However, according to Fisco, bitcoins are not corporate bonds under the corporate law, and also not money under the company law, the publication noted. Furthermore, Fisco claims that they “will not be the securities stipulated by the Financial Instruments and Exchange Act.”
Fisco Expects Demand for Crypto Bonds to Grow
In April, the Japanese government legalized cryptocurrencies as a form of payment. In July, bitcoin purchases became exempt from the nation’s 8 percent sales tax, “putting them on similar footing with financial products like stocks and bonds,” wrote Bloomberg.
Fisco’s experiment “is another example of how companies and investors worldwide are looking for ways to make money out of bitcoin,” the publication added.
The exchange says it expects the digital currency market to grow and is, therefore, testing new possibilities of products and services based on them. “We expect that bitcoin will eventually be recognized as a financial product” under Japanese financial laws, Tashiro said. He added that Fisco could “play a role of arranger” and earn fees if cryptocurrency debt instruments take off.
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