WEBVTT - The World Is Cracking Down on Bitcoin—Except Japan 0:00:04.559 --> 0:00:07.800 In late January, Roger Vere woke up on the island 0:00:07.840 --> 0:00:12.319 of St. Kitts. Roger lives in Tokyo, but spends a 0:00:12.320 --> 0:00:15.360 lot of time in this Caribbean tax haven, which is 0:00:15.400 --> 0:00:19.080 a popular hangout for people like him in the bitcoin community. 0:00:19.960 --> 0:00:23.040 On this particular morning, he was in for a surprise. 0:00:23.680 --> 0:00:25.599 I think I woke up in the morning and you know, 0:00:25.680 --> 0:00:27.480 check the daily news at one of the first the 0:00:27.520 --> 0:00:29.160 first thing I do every day when I wake up 0:00:29.200 --> 0:00:30.800 wherever I am in the world, is to check the 0:00:31.360 --> 0:00:34.880 latest news. And I thought, oh, wow, the biggest hack yet. 0:00:35.320 --> 0:00:38.800 All right, that's a pretty big deal. An exchange in 0:00:38.920 --> 0:00:41.520 Japan that fell prey to what could be a record 0:00:41.560 --> 0:00:45.080 heist is now under government scrutiny. Coin check says five 0:00:45.560 --> 0:00:49.519 thirty million dollars worth of cryptocurrency was stolen by hackers. 0:00:50.080 --> 0:00:53.000 That would be the biggest ever theft of digital currency. 0:00:53.200 --> 0:00:56.040 Roger himself didn't have any money at coin check, the 0:00:56.080 --> 0:00:58.880 exchange of the hackers targeted, but his friend did and 0:00:58.960 --> 0:01:01.960 called Roger in a path and he called me, and 0:01:02.000 --> 0:01:04.160 you know, he doesn't speak in English. She's like, you know, yeah, 0:01:04.160 --> 0:01:06.679 by yah bay, which means like this is this is crazy? 0:01:06.720 --> 0:01:08.040 What am I gonna do? What? Am I gonna do? 0:01:09.360 --> 0:01:12.759 A huge hack of a Japanese crypto exchange. It sounded 0:01:12.800 --> 0:01:15.960 eerily similar to another disaster in Tokyo that went down 0:01:16.000 --> 0:01:21.880 four years ago. Four hundred million dollars worth of another cryptocurrency, 0:01:21.959 --> 0:01:26.000 Bitcoin was stolen from an exchange, also in Tokyo. This 0:01:26.080 --> 0:01:29.640 exchange went by the name of Mount Cox. Are those 0:01:29.680 --> 0:01:32.959 two major hackings? But maybe within you know, this eight 0:01:32.959 --> 0:01:35.960 minute walk of each other, you know, probably more bitcoins 0:01:35.959 --> 0:01:38.800 have been exchanged than any other place on the planet. 0:01:38.959 --> 0:01:41.600 So they've had the biggest hacks, but they've had the biggest, 0:01:42.080 --> 0:01:45.240 most successful amount of bitcoin trades taking place. So maybe 0:01:45.280 --> 0:01:48.080 this is a a bit of an epicenter four bitcoin 0:01:48.120 --> 0:01:50.400 trades happening around the world here right here in Hilia. 0:01:52.160 --> 0:01:54.640 The hack this time, the one of Queen Check, was 0:01:54.880 --> 0:01:59.600 particularly embarrassing for Japan because lawmakers there had just implemented 0:01:59.640 --> 0:02:03.880 some of the world's most cryptocurrency friendly regulations. These were 0:02:03.880 --> 0:02:07.920 specifically designed to prevent a repeat of the Mount Cox fiasco. 0:02:08.320 --> 0:02:10.240 I've talked to a lot of Japanese lawmakers over the 0:02:10.240 --> 0:02:13.079 past year, and from many of them, these laws were 0:02:13.080 --> 0:02:16.480 a source of pride. They hope that Japan would serve 0:02:16.520 --> 0:02:18.400 as a template for the rest of the world in 0:02:18.480 --> 0:02:21.519 terms of crypto regulation, even as many countries cracked down 0:02:21.560 --> 0:02:25.400 on it. Now, with half a billion dollars missing, these 0:02:25.440 --> 0:02:42.160 new cryptocurrency laws are facing their first major test. Hi, 0:02:42.520 --> 0:02:46.600 I'm Akio and I'm not coming up. And this week Undecrypted, 0:02:46.760 --> 0:02:49.400 we're taking you to Japan, which has become the world's 0:02:49.440 --> 0:02:53.160 premier hub or bitcoin. We'll be tracing the volatile rise 0:02:53.200 --> 0:02:55.839 of bitcoin here through the eyes of the people who 0:02:55.840 --> 0:02:59.040 were there from the very start, people like Roger has 0:02:59.080 --> 0:03:02.000 become known as bit in Jesus for his evangelism or 0:03:02.080 --> 0:03:05.560 bitcoin right now. There are plenty of critics who say 0:03:05.600 --> 0:03:10.320 the recent crashing crypto crisis vindicates their cynicism, but supporters 0:03:10.360 --> 0:03:13.359 are just as bullish as ever. They say the Queen 0:03:13.480 --> 0:03:17.280 check heist is just a temporary setback. So will Japan 0:03:17.360 --> 0:03:20.200 continue to embrace this new world or will it turn 0:03:20.240 --> 0:03:32.600 its back stay with us. Back in two thousand six, 0:03:32.880 --> 0:03:35.280 Roger was in his mid twenties and he was both 0:03:35.320 --> 0:03:39.120 a millionaire and a convicted felon. He was a millionaire 0:03:39.160 --> 0:03:42.760 from the online business he started that sold old computer parts, 0:03:43.120 --> 0:03:46.600 and he was an expelling because he sold explosives online 0:03:46.680 --> 0:03:50.240 through that business without a license. When Roger got out 0:03:50.240 --> 0:03:53.080 of prison, he decided to leave the US. He had 0:03:53.120 --> 0:03:57.280 had a Japanese girlfriend once, and I figured since the 0:03:57.280 --> 0:03:59.360 one Japanese girlfriend was a good experience, I figured the 0:03:59.400 --> 0:04:02.120 next one probably would be too. So when I arrived 0:04:02.320 --> 0:04:04.480 in Japan, actually I was kind of basically retired at 0:04:04.480 --> 0:04:06.320 that point. I had enough money where I could do 0:04:06.400 --> 0:04:10.160 what I wanted. And first, first, I don't know, a 0:04:10.160 --> 0:04:12.800 couple of years, was hanging out and puny and chasing 0:04:12.840 --> 0:04:15.760 girls and doing that sort of thing. That went on 0:04:15.920 --> 0:04:19.880 for a while, learning martial arts by day, partying at night. 0:04:20.960 --> 0:04:25.040 Then in two thousand ten, Rogers stumbled upon bitcoin, back 0:04:25.120 --> 0:04:28.080 during its super early days. I heard about this on 0:04:28.160 --> 0:04:30.560 a show called Free Talk Live, which is a libertarian 0:04:30.880 --> 0:04:33.960 oriented radio program on in the US, and Roger spent 0:04:34.000 --> 0:04:36.080 a couple of minutes googling, but then forgot about it. 0:04:36.120 --> 0:04:37.960 A couple of months later, the same show brought it 0:04:38.080 --> 0:04:40.320 up again, and then I googled it again, and that's 0:04:40.360 --> 0:04:42.160 when I put all the pieces together in my mind, 0:04:42.160 --> 0:04:44.000 and I knew people were going to start using it 0:04:44.040 --> 0:04:47.000 his money. Roger wanted to invest and he discovered a 0:04:47.040 --> 0:04:50.360 company called mount Cox. Mount Cox was a bitcoin exchange. 0:04:50.440 --> 0:04:55.240 He'd let you buy and sell bitcoin. In early two 0:04:55.279 --> 0:04:58.680 thousand eleven, moult Cox was the biggest bitcoin exchange in 0:04:58.720 --> 0:05:02.279 the world, which really saying a lot because at the 0:05:02.320 --> 0:05:05.160 time there were just barely a handful of other scrappy 0:05:05.240 --> 0:05:08.680 operations out there. Back then, mount Cox was still run 0:05:08.680 --> 0:05:11.679 out of San Francisco by an American programmer called Jet 0:05:11.720 --> 0:05:15.000 the Caleb. It was a tiny operation and bitcoin was 0:05:15.040 --> 0:05:18.839 still trading at around eighty cents each, which, fun fact, 0:05:19.040 --> 0:05:22.520 as of taping, has increased by about one million percent. 0:05:23.640 --> 0:05:26.320 At around this time, mount Cox also caught the eye 0:05:26.400 --> 0:05:29.960 of another bitcoin enthusiast living in Tokyo, a man named 0:05:29.960 --> 0:05:33.440 Mark Carpelez. He's French and he came to Japan around 0:05:33.440 --> 0:05:35.880 the same time Roger did. According to one of Mark's 0:05:35.920 --> 0:05:39.760 former employees, you'll meet this person in a second. Mark 0:05:39.880 --> 0:05:42.640 was drawn here by his love of Japanese anime, manga, 0:05:42.760 --> 0:05:46.520 and culture. Mark bought mount Cox from its American founder. 0:05:46.839 --> 0:05:49.720 He then moved the business to Tokyo. In the meantime, 0:05:49.960 --> 0:05:52.360 Roger was pouring a significant chunk of his wealth into 0:05:52.360 --> 0:05:55.360 mount Cox. The first wire sent to Mount Cox was 0:05:55.400 --> 0:05:58.080 for U S dollars. It was a risk. And then 0:05:58.480 --> 0:06:00.800 maybe just a couple of weeks later, talking to another 0:06:00.920 --> 0:06:03.559 friend of mine and he told me sarcastically on the phone, 0:06:03.560 --> 0:06:05.880 he said, Roger, if you think bitcoin is such a 0:06:05.880 --> 0:06:09.360 good idea, why don't you buy more of them? You're right? 0:06:09.760 --> 0:06:11.880 So the next day I sent another wired amount Cox 0:06:11.920 --> 0:06:15.240 somebody even more. Roger was all in and his next 0:06:15.240 --> 0:06:17.599 step was to spread the good word. So one of 0:06:17.600 --> 0:06:19.839 the things I did was set up the Tokyo Bitcoin 0:06:19.880 --> 0:06:22.600 meet up group. This was the world's second bitcoin meet 0:06:22.680 --> 0:06:25.400 up group, after the one in San Francisco. He became 0:06:25.440 --> 0:06:28.960 an important fixture in the bitcoin community in Tokyo and 0:06:29.000 --> 0:06:31.840 we had it in shibullet or fruit parlor. So I 0:06:31.880 --> 0:06:34.200 contacted them and said, hey, is it okay if we 0:06:34.240 --> 0:06:36.080 have like a social meet up and we'll we'll buy 0:06:36.120 --> 0:06:42.120 fruit from you guys, and they said, yeah, sure, no problem. 0:06:42.120 --> 0:06:44.960 A fruit parlor is one of these places you only 0:06:45.000 --> 0:06:48.320 see in Japan. It's like a fancy cafe, but instead 0:06:48.320 --> 0:06:52.279 of pastries or something, you order really expensive fruit. He 0:06:52.320 --> 0:06:54.560 was about two years later that I first heard about Roger. 0:06:54.839 --> 0:06:56.480 One of my friends met him at a house party 0:06:56.520 --> 0:07:00.240 in Tokyo, and he said, there's this crazy American guy 0:07:00.279 --> 0:07:03.520 who wouldn't stop talking about some digital currency called bitcoin, 0:07:04.000 --> 0:07:06.680 and he gave me one whole bitcoin. But I have 0:07:06.720 --> 0:07:09.680 no idea what that even means. This was something that 0:07:09.800 --> 0:07:13.280 Razer did a lot. Giving away bitcoin was his way 0:07:13.320 --> 0:07:18.160 of spreading the word. How much bitcoin do you estimate 0:07:18.240 --> 0:07:20.760 you gave away during that period? Thousands and thousands of 0:07:21.040 --> 0:07:23.760 bitcoins of full bitcoins, Yeah, thousands of thousands, more than 0:07:23.760 --> 0:07:27.760 ten thousand, Yes, ten thousand bitcoins would be worth what 0:07:28.840 --> 0:07:32.320 five sillion dollars? Right? No? Oh, non, worth fifty million dollars? 0:07:34.160 --> 0:07:36.920 So used to me give me ten thousand bitcoin? I'd 0:07:36.920 --> 0:07:40.360 say at least ten thousand. In those early days, the 0:07:40.440 --> 0:07:44.480 meetups were attended by mostly non Japanese enthusiasts, Lots of 0:07:44.480 --> 0:07:47.720 people who are libertarians, a bit of like a hacker 0:07:47.760 --> 0:07:54.000 anarchist vibe. There's people who are very much dedicated to 0:07:52.600 --> 0:07:57.920 to building a kind of solid community. This is Thomas Gluxman, 0:07:58.120 --> 0:08:01.000 who used to work from outdogs. He attended the meet 0:08:01.040 --> 0:08:05.920 ups occasionally, not just about like oh, I'm curious about 0:08:05.920 --> 0:08:08.120 how I can make money from this thing. That was 0:08:08.320 --> 0:08:11.800 not really the the goal or the focus of bitcoin 0:08:11.880 --> 0:08:15.200 back then. Then in bitcoin's first boom in late two 0:08:15.200 --> 0:08:19.280 thousand thirteen, it hit one thousand dollars. The digital currency 0:08:19.560 --> 0:08:22.320 has hit a record high morning. The question really is 0:08:22.360 --> 0:08:25.800 why why has bitcoins served so much? It's not just 0:08:25.960 --> 0:08:28.840 that prices are going up, it's usage is going up. 0:08:28.840 --> 0:08:31.360 There are more and more bitcoins. After that, all kinds 0:08:31.360 --> 0:08:33.880 of folks started coming. They meet up outgrew the fruit 0:08:33.920 --> 0:08:36.400 Spoiler and moved to a bar in ro Pungy that's 0:08:36.440 --> 0:08:39.760 one of Tokyo's nightlife areas. Yeah, and the craziest thing 0:08:39.800 --> 0:08:43.280 that I remember were the burlesque dancers. These were basically 0:08:43.440 --> 0:08:47.560 uh well era strippers. They didn't take all their clothes off, 0:08:47.920 --> 0:08:50.760 but they had QR code stickers on their bodies and 0:08:50.800 --> 0:08:54.640 he was their bitcoin wallet address. So people if they 0:08:54.679 --> 0:08:57.360 liked their dancing, they would scan the QR code on 0:08:57.600 --> 0:09:01.559 their bodies and send them bitcoin with their phone. It's 0:09:01.600 --> 0:09:07.920 amazing anyway, the burlesque side. For years, this meet up 0:09:07.920 --> 0:09:10.280 created a forum for people in Japan to learn about 0:09:10.320 --> 0:09:14.160 bitcoin and balance around ideas. He even convinced quite a 0:09:14.240 --> 0:09:16.600 number of people to quit their day jobs and embark 0:09:16.679 --> 0:09:21.000 on various crypto related ventures. Roger did other things to 0:09:21.080 --> 0:09:25.440 popularize bitcoin too. Bitcoin got started by a person or 0:09:25.440 --> 0:09:27.199 a group of people who went by the name of 0:09:27.280 --> 0:09:31.360 Satoshi Nakamoto with a manifesto that laid out the whole 0:09:31.440 --> 0:09:34.800 vision for it. That document was written in English, so 0:09:35.000 --> 0:09:39.600 Roster paid to get it translated into Japanese. Roger also 0:09:39.720 --> 0:09:44.040 created YouTube videos explaining bitcoin in Japanese and translated other 0:09:44.080 --> 0:09:48.440 promotional material like the bitcoin dot org website, and he 0:09:48.480 --> 0:09:51.200 also invested a lot of his own money and bitcoin 0:09:51.280 --> 0:09:55.600 startups like Cracking, bit pay and blockchain dot Info. He 0:09:55.720 --> 0:09:58.120 was one of the two people who initially funded the 0:09:58.160 --> 0:10:02.679 Bitcoin Foundation, which is an organization that promotes bitcoin adoption, 0:10:02.920 --> 0:10:07.360 with five thousand bitcoin. Meanwhile, Roger's meet up continued growing. 0:10:08.120 --> 0:10:10.560 Soon he was attracting people who would later go on 0:10:10.600 --> 0:10:14.240 to play key roles in Japan's bitcoin community, people like 0:10:14.400 --> 0:10:18.920 use O'Connell, a former Goldman sex retistrator. You so now 0:10:19.040 --> 0:10:23.360 runs the company bit Flyer, which is Japan's largest bitcoin exchange. 0:10:24.400 --> 0:10:26.000 Do you remember some of the conversations you had with 0:10:26.040 --> 0:10:28.440 him back then? Was it? Yeah, we both talked about 0:10:28.440 --> 0:10:30.640 who you're interested in bitcoin? So, I mean again in 0:10:30.679 --> 0:10:34.160 that way the meetups that you organized were a lot 0:10:34.200 --> 0:10:36.280 of you know, and the things that you translated were 0:10:36.920 --> 0:10:41.360 the first interactions Japanese people have with bitcoin, right thanks 0:10:41.360 --> 0:10:46.760 to me as the foreigner, I guess. Meanwhile, as more 0:10:46.840 --> 0:10:51.760 people poured into bitcoin, milkox grew, the company began attracting 0:10:51.840 --> 0:10:55.240 interest from the Japanese media. This is Thomas, the former 0:10:55.280 --> 0:10:59.080 mountdos employee. I remember we would have goals to the 0:10:59.120 --> 0:11:03.400 office from like the various different TV companies and newspapers 0:11:03.440 --> 0:11:06.439 asking us like what is bitcoin? How does it work? 0:11:06.880 --> 0:11:10.360 They thought mount box was bitcoin. You know. Mark was 0:11:10.400 --> 0:11:15.120 often quoted in the Japanese media as the CEO of bitcoin, 0:11:15.760 --> 0:11:18.800 So there wasn't that mature level of understanding that you 0:11:18.920 --> 0:11:23.160 see now in the Japanese media about cryptocurrency and bitcoin 0:11:23.240 --> 0:11:26.440 and the difference between the exchanges and the cryptocurrency itself. 0:11:26.800 --> 0:11:29.720 As mount Dox's influence grew both in Japan and abroad, 0:11:30.240 --> 0:11:33.800 for some time it handled more than gluevable bitcoin trading, 0:11:34.480 --> 0:11:36.840 which by the end of thousand thirteen and early two 0:11:37.120 --> 0:11:41.200 fourteen became a pretty big deal until it all came 0:11:41.280 --> 0:11:50.479 crashing down in early January. Milk box users started complaining 0:11:50.720 --> 0:11:54.480 that they weren't able to withdraw their money. The exchange 0:11:54.480 --> 0:11:58.320 officially announced it was stopping withdrawals in early February and 0:11:58.360 --> 0:12:01.960 stopped trading in mid fib You worry. The news set 0:12:02.040 --> 0:12:11.240 shock waves through the bitcoin community worldwide. In Tokyo, Nolan. 0:12:16.120 --> 0:12:19.400 It's still not totally clear what happened, but someone, either 0:12:19.400 --> 0:12:22.920 an inside job or external hackers ended up stealing most 0:12:22.960 --> 0:12:26.880 of the customers bitcoin deposits at Mount Cox, and those 0:12:26.960 --> 0:12:29.640 were worth about four dred million dollars at two thousand 0:12:29.720 --> 0:12:34.840 fourteen prices. Yeah, I was in Japan, and I think 0:12:34.840 --> 0:12:38.960 people were just stunned more than anything else. Moult Cox 0:12:39.080 --> 0:12:42.640 was unable to find these deposits and filed for bankruptcy 0:12:42.679 --> 0:12:47.240 protection in Tokyo. I remember visiting a police station in Shibia, 0:12:47.440 --> 0:12:49.959 which is about a five minute walk from Mount Cox headquarters, 0:12:50.200 --> 0:12:53.280 and sitting down with a man from their cyber crimes division, 0:12:53.360 --> 0:12:54.960 and it was so clear to me that he was 0:12:55.120 --> 0:12:58.760 totally clueless about what was going on bitcoin, digital currency, 0:12:58.880 --> 0:13:02.040 Mount Cox. It was it was all completely new to him. 0:13:02.040 --> 0:13:05.480 But of course that experience forced Japan to learn and 0:13:05.559 --> 0:13:08.080 unleash this frenzy to figure out how to never let 0:13:08.120 --> 0:13:22.280 something like this happen again. Welcome back. At this point, 0:13:22.320 --> 0:13:26.040 it's March and Japan is reeling from the hack in 0:13:26.120 --> 0:13:30.520 subsequent bankruptcy of the Mount Cox Bitcoin Exchange, the authorities 0:13:30.640 --> 0:13:33.080 knew they had to act to stop something like this 0:13:33.200 --> 0:13:36.839 from happening ever again, so Japan's Prime Minister signed the 0:13:36.920 --> 0:13:39.200 job of sorting the sell out to someone in his 0:13:39.360 --> 0:13:50.680 ruling party. A lawmaker by the name of mine said, 0:13:50.679 --> 0:13:53.200 this is when he first learned about bitcoin. If it 0:13:53.240 --> 0:13:55.400 wasn't from Montgos, he wouldn't have been involved with the 0:13:55.440 --> 0:13:58.920 bitcoin regulation at all. He was a pure coincidence. He 0:13:58.960 --> 0:14:02.720 didn't know a thing about bitcoin. With pretty much everyone 0:14:02.840 --> 0:14:05.280 in the country clueless about what to do, from the 0:14:05.440 --> 0:14:09.760 police to the banks to establish tech companies, if Gouda 0:14:10.000 --> 0:14:12.440 did the only thing you could do back then, he 0:14:12.480 --> 0:14:16.840 went to go meet Roger told you, sure, we know, Yeah, 0:14:21.800 --> 0:14:24.000 he told me, of course. The first thing I did 0:14:24.160 --> 0:14:27.640 was going to Roger's meetups. Instead of searching for experts 0:14:27.640 --> 0:14:30.000 at all kinds of places, he was faster to just 0:14:30.040 --> 0:14:32.720 go to the meet up and ask questions there directly 0:14:33.080 --> 0:14:35.320 with the people who were buying it and using it. 0:14:35.880 --> 0:14:39.280 That's where he met others like the former Goldman trader 0:14:39.440 --> 0:14:42.320 used o'conno at this point, I mean, Yuki didn't really 0:14:42.320 --> 0:14:45.040 have another country's laws he could turn to, for example, 0:14:45.880 --> 0:14:48.640 since no other developed economy had really waited into this. 0:14:49.120 --> 0:14:51.440 He was coming up with a new framework from scratch 0:14:51.520 --> 0:14:56.600 for bitcoin regulation. He came to believe that he needed 0:14:56.640 --> 0:15:00.240 to prevent the government from suffocating this Nissan industry to 0:15:00.320 --> 0:15:02.960 its death, that the industry would more or less be 0:15:03.040 --> 0:15:06.880 able to regulate itself. Of course, that's exactly what the 0:15:06.880 --> 0:15:10.720 industry power players like use O'Connell wanted to hear. While 0:15:10.800 --> 0:15:14.280 Japan has fewer libertarians, in the US, I've met my 0:15:14.360 --> 0:15:17.120 fair share of gold bugs and government haters at Roger's 0:15:17.160 --> 0:15:21.240 meetups that I attended. Here's Thomas, the former Mountcox employee. Again. 0:15:22.680 --> 0:15:26.520 I think it's really fascinating because um persent. I was 0:15:26.600 --> 0:15:30.640 just thinking that, Okay, they're probably going to, um, you know, 0:15:30.720 --> 0:15:33.360 take the Chinese approach of just like okay, which is 0:15:33.360 --> 0:15:36.160 gonna ban this thing, and you nobody's gonna be able 0:15:36.200 --> 0:15:38.280 to do this again. We're never gonna hear this again. 0:15:38.600 --> 0:15:40.880 That's it. But they kind of win the opposite way 0:15:40.920 --> 0:15:44.320 of Okay. We think if Gooda ended up proposing legislation 0:15:44.400 --> 0:15:49.520 that would embrace cryptocurrencies, effectively turning bitcoin into legal tender 0:15:49.560 --> 0:15:53.160 in Japan alongside with the traditional currency, the Japanese yen. 0:16:00.040 --> 0:16:03.800 More about in the next day, Miniyuki told me there 0:16:03.880 --> 0:16:07.280 wasn't much pushback. It wasn't even about pushback or not, 0:16:07.520 --> 0:16:10.640 because no one even understood bitcoin. No one in the 0:16:10.680 --> 0:16:14.400 government knew what's good and bad about it. They really 0:16:14.440 --> 0:16:17.560 just left it to his team, the technology experts. It 0:16:17.680 --> 0:16:21.160 was just two people who knew anything, Miniyuki and his boss. 0:16:21.600 --> 0:16:24.600 The new law was passed in sixteen and went into 0:16:24.640 --> 0:16:28.720 effect in April. It goes against what governments have done 0:16:28.800 --> 0:16:32.320 in many other major economies. In the US and Europe, 0:16:32.360 --> 0:16:36.120 regulators and politicians have been cautious. You see headlines every 0:16:36.200 --> 0:16:39.920 day with people giving all kinds of warnings. China has 0:16:40.000 --> 0:16:44.520 outright band trading and initial coin offerings. South Korea also 0:16:44.600 --> 0:16:49.880 banned initial coin offerings and cracked down on exchanges. Experson 0:16:50.000 --> 0:16:53.120 was coming alright, so so she's like, oh, yeah, you 0:16:53.120 --> 0:16:57.080 can play with bitcoin here, no problem. A couple of 0:16:57.080 --> 0:16:59.480 months ago, Roger and I went to an electronics store 0:16:59.520 --> 0:17:02.920 called Comment Up to buy a USB stick with bitcoin. 0:17:03.120 --> 0:17:04.520 That's the kind of thing you can do now with 0:17:04.560 --> 0:17:08.600 this new legislation, which made bitcoin illegally recognized form of payment, 0:17:09.280 --> 0:17:13.720 Japan is the first major economy to do so. Okay, 0:17:13.760 --> 0:17:16.640 And now she's pointed at QR code, which roger scanning, 0:17:17.480 --> 0:17:22.000 and what does it say? Sixty one since it's non cling, 0:17:22.119 --> 0:17:24.959 send and screen the transaction. The benefit of these new 0:17:25.000 --> 0:17:28.080 laws is that they give this clarity, this certainty to 0:17:28.240 --> 0:17:31.520 companies in Japan that want to try out a cryptocurrencies. 0:17:32.200 --> 0:17:34.600 They don't have to worry about getting punished by regulators 0:17:34.640 --> 0:17:39.000 for experimenting with something that's legally dubious. Not my phone 0:17:39.040 --> 0:17:41.520 sent it, he said, His phone is sent it. Her 0:17:41.600 --> 0:17:46.280 should pop up with me in the second just okay, okay. 0:17:47.600 --> 0:17:50.879 The new law also gives the main financial regulator the 0:17:51.000 --> 0:17:55.000 right to audit and give licenses to cryptocurrency exchanges. This 0:17:55.080 --> 0:17:58.680 is supposed to protect against hackers and prevent money laundering. 0:18:02.400 --> 0:18:04.800 For a time, things seem to be going really well 0:18:04.840 --> 0:18:08.680 for cryptocurrencies in Japan. In April seventeen, when the new 0:18:08.760 --> 0:18:12.200 law took effect in Japan, one bitcoin was worth about 0:18:12.240 --> 0:18:16.600 twelve hundred dollars That rose dramatically over the next few months. 0:18:17.760 --> 0:18:20.920 It actually crossed over into record territory last night, moving 0:18:20.960 --> 0:18:24.480 closer to that eight thousand dollar mark, Bitcoin soars past 0:18:24.560 --> 0:18:27.760 thirteen thousand dollars for the first time the largest, and 0:18:27.800 --> 0:18:31.720 by December bitcoin prices were closing in a nineteen thousand 0:18:31.760 --> 0:18:36.760 dollars Roger has almost certainly gotten rich with his bitcoin investments, 0:18:37.080 --> 0:18:39.159 although he doesn't want to say exactly how much he owns, 0:18:39.720 --> 0:18:42.680 and he's becoming a celebrity in his own right. Towards 0:18:42.720 --> 0:18:44.919 the end of last year, right around the peak of 0:18:44.920 --> 0:18:47.800 the hype for crypto, I went to the Tokyo Bitcoin 0:18:47.840 --> 0:18:50.080 meet up with him, the very one he started just 0:18:50.119 --> 0:18:53.119 a couple years back. It was nothing like the quiet, 0:18:53.160 --> 0:18:55.960 intellectual discussions of the food parlor that I was used to. 0:18:57.560 --> 0:18:59.879 There must have been at least a hundred people packed 0:18:59.880 --> 0:19:02.440 to this bar in Tokyo. As soon as you walked 0:19:02.440 --> 0:19:05.800 into the door together, Roger got mobbed by everyone there. 0:19:06.240 --> 0:19:07.679 I didn't even get a chance to talk to him 0:19:07.720 --> 0:19:12.640 for the rest of the night. But a few days 0:19:12.680 --> 0:19:15.480 before the end of the year, prices started to fall, 0:19:15.920 --> 0:19:18.679 and by the end of January, several people watching the 0:19:18.720 --> 0:19:22.200 markets were talking about how the bitcoin bubble might be bursting. 0:19:23.200 --> 0:19:27.640 Then on January, just when prices were dipping towards ten 0:19:27.720 --> 0:19:32.520 thousand dollars. The Japanese cryptocurrency exchange coin check announced that 0:19:32.560 --> 0:19:42.800 it was stopping withdrawals. We were rushing to understand exactly 0:19:42.840 --> 0:19:45.880 what happened in coin check. Soon we learned that half 0:19:45.880 --> 0:19:49.520 a billion dollars of this new currency was missing and 0:19:49.520 --> 0:19:53.640 that about two sixty customers were affected. In the days 0:19:53.720 --> 0:19:57.320 after the heights became public, investors got worried that regulators 0:19:57.359 --> 0:20:00.800 would take action to protect consumers. A threat of more 0:20:00.840 --> 0:20:03.920 regulation pushed the price of bitcoin all the way down 0:20:03.920 --> 0:20:07.639 to six thousand. Ironically, the heist, like the one that 0:20:07.680 --> 0:20:11.000 had happened at coin check, was exactly the kind of 0:20:11.040 --> 0:20:13.680 thing that the new Japanese law was supposed to prevent, 0:20:13.960 --> 0:20:16.560 but its focus on self regulation meant that it was 0:20:16.680 --> 0:20:19.880 mostly up to each exchange to ensure that it was secure. 0:20:20.280 --> 0:20:28.280 Here's the lawmaker, Menayuki Good again told me that the 0:20:28.359 --> 0:20:31.800 law already requires companies to be secure, and how how 0:20:31.960 --> 0:20:34.720 you take that is up to each individual company to decide. 0:20:35.320 --> 0:20:37.520 So he doesn't think it's anything that the government should 0:20:37.520 --> 0:20:40.240 get involved in. It's up to each individual company and 0:20:40.280 --> 0:20:44.280 their management. But amid all this finger pointing public outrage 0:20:44.320 --> 0:20:49.280 and media scrutiny. Something unexpected happened. You think a little 0:20:49.320 --> 0:20:52.200 known exchange like coin check losing half a billion dollars 0:20:52.200 --> 0:20:54.879 would doom it, But it turns out coin check was 0:20:54.920 --> 0:20:58.200 making so much money he was able to use company 0:20:58.240 --> 0:21:02.280 funds to plug their giant whole. By mid March, less 0:21:02.280 --> 0:21:05.000 than two months after the hack, coin check had paid 0:21:05.000 --> 0:21:08.280 back everyone using its own money, which is just such 0:21:08.320 --> 0:21:12.199 a different story from what happened with mount Cox. To 0:21:12.400 --> 0:21:16.320 this day, four years later, Mount Cox's customers are still 0:21:16.400 --> 0:21:19.520 waiting to get their deposits back. I asked Roger if 0:21:19.520 --> 0:21:21.879 you thought the industry was getting better at responding to 0:21:21.920 --> 0:21:24.399 these big hacks, But so, yeah, I guess I do 0:21:24.560 --> 0:21:27.959 think that things are getting better. Um, but that doesn't 0:21:28.240 --> 0:21:30.280 mean that there aren't going to be more horrible experiences 0:21:30.280 --> 0:21:33.400 in the future. But if you look at the horrible 0:21:33.400 --> 0:21:36.200 things that central banking have enabled across the world, it's 0:21:36.240 --> 0:21:38.040 it's certainly not going to be worse than that. So 0:21:38.119 --> 0:21:42.800 it's a the problems enabled or problems caused by cryptocurrency 0:21:43.000 --> 0:21:47.119 hackings or pale in comparison to the you know, destruction 0:21:47.160 --> 0:21:49.640 caused by central banking. For the last couple hundred years. 0:21:50.560 --> 0:21:54.560 It's spoken like a true libertarian for sure, although actually 0:21:54.640 --> 0:21:57.160 coin checks Recovery is quiet at calls for a crypto 0:21:57.160 --> 0:22:00.119 crack down in Japan. While reporting on the hack, we 0:22:00.200 --> 0:22:03.480 reached out to dozens of lawmakers and regulators. Not even 0:22:03.560 --> 0:22:06.760 lawmakers an opposition party thought the laws should be rolled back. 0:22:07.400 --> 0:22:10.320 Japan is taking to its guns. Here's Thomas, the former 0:22:10.320 --> 0:22:14.320 Mountgos employee. The fact that now we've gone from Japan 0:22:14.480 --> 0:22:20.880 is just so inconspicuous. Crypto hub which happened organically because 0:22:20.880 --> 0:22:23.200 of the presence of malt Cox and because of the 0:22:23.280 --> 0:22:27.280 kind of the handful or dozen or so very crypto 0:22:29.240 --> 0:22:32.120 like crypto evangelists like Roger Vert and a few others 0:22:32.119 --> 0:22:35.000 for example, who just happened to be based here to 0:22:35.200 --> 0:22:40.639 this now very much top down driven. Welcome to the Japan. 0:22:41.240 --> 0:22:43.200 We want to be the crypto hub of Asia, if 0:22:43.240 --> 0:22:45.400 not the world. And this is what I'm hearing now 0:22:45.440 --> 0:22:48.360 directly from the dog Yo government. Um, that's what they 0:22:48.400 --> 0:22:52.119 want Japan to be seen as. In the meantime, emboldened 0:22:52.119 --> 0:22:55.080 by the regulatory clarity that the new laws have brought, 0:22:55.320 --> 0:22:59.399 Japanese companies are continuing to jump into krypto rucked in, 0:22:59.640 --> 0:23:02.879 which is like Japan's Amazon, set in February that it 0:23:02.880 --> 0:23:06.400 will launch its own token. Coin check itself was also 0:23:06.480 --> 0:23:09.920 sold last week to Monic's, a well known online retail 0:23:09.960 --> 0:23:12.600 broker in Japan, a little bit like e Trade in 0:23:12.600 --> 0:23:17.040 the US. What's more, a government back study group this 0:23:17.119 --> 0:23:21.560 month announced a basic regulatory framework for initial coin offerings, 0:23:21.600 --> 0:23:24.240 the first of its kind in the world. If Japan 0:23:24.400 --> 0:23:28.160 and next clear guidelines for icos, it could attract blockchain 0:23:28.200 --> 0:23:30.800 startups and become a hub for more than just crypto trading. 0:23:34.240 --> 0:23:37.760 As for Roger these days, well, he's still just as 0:23:37.800 --> 0:23:41.400 bullish about cryptocurrencies as he's always been. Every day there 0:23:41.440 --> 0:23:44.160 seems to be someone new that declares the end of bitcoin, 0:23:44.520 --> 0:23:46.440 and it seemed like there's this general sense that the 0:23:46.440 --> 0:23:49.520 bitcoin bubble has popped, but like a true believer, Roger 0:23:49.600 --> 0:23:52.760 isn't phazed by any of that. So somehow I wound 0:23:52.800 --> 0:23:55.439 up with the nickname Bitcoin Jesus. I think a more 0:23:55.520 --> 0:23:58.560 accurate nickname probably would have been a Bitcoin Johnny Appleseed, 0:23:59.520 --> 0:24:01.240 because I do feel like I planned a lot of 0:24:01.280 --> 0:24:05.480 the seeds around the world to help get cryptocurrency started. 0:24:05.760 --> 0:24:08.720 And uh, it's been a fun ride Um, there's not 0:24:08.800 --> 0:24:11.240 really anything more fulfilling to work on something that literally 0:24:11.240 --> 0:24:13.600 can improve the lives of every human being on the planet. 0:24:14.359 --> 0:24:16.520 Things like that don't come along every day, and here 0:24:16.520 --> 0:24:19.399 we are right still at the early stages of that. 0:24:19.520 --> 0:24:22.360