by Jamie Holmes
In a first such deal in Japan, Fisco Ltd. has issued bonds denominated in bitcoins. The financial information provider designed the ‘bitcoin bond’ so it could meet regulatory requirements and the development of a vast array of bitcoin instruments is helping to galvanize its status as an asset class in its own right.
After becoming a legally recognized payment method in Japan, Fisco anticipates that bitcoin will be recognized as a financial asset. The bond sale took place on August 10, where a unit within Fisco issued three-year debt worth 200 bitcoins to another firm within the group, to see if the instrument could be useful for fundraising. The debt pays a three percent coupon and returns 200 bitcoins to the holder on maturation.
The growing ecosystem in Japan is seeing companies not only embrace the cryptocurrency, but also devise novel ways with which to make money from bitcoin. Masayuki Tashiro, Fisco’s chief product officer, stated that he expected bitcoin “will eventually be recognized as a financial product” under local laws. Once bitcoin is recognized as a financial asset and the issuance of cryptocurrency debt becomes a reality, Tashiro talked of the potential for Fisco to earn fees, “if we play a role of arranger.”
With a supportive regulatory framework, businesses have been unrestricted when it comes to dealing with cryptocurrency. Following the legalization of bitcoin as a payment method on April 1, many large retailers such as Bic Camera rushed to integrate the digital currency.
Welcome Bitcoin, to the World of High Finance
The bitcoin bond “brings digital currencies into the world of high finance,” according to Dan Doney, chief executive officer of Securrency. With bitcoin futures soon to be traded on the largest US options exchange, opening the door for an approval of the ‘COIN’ bitcoin ETF. The emergence of financial instruments surrounding bitcoin are bringing the cryptocurrency closer to a traditional financial product. More derivatives and financial instruments based on bitcoin will add liquidity to markets and increase the effectiveness of price discovery by the markets.
Bitcoin has enjoyed a surge in interest from institutional investors and the general public as the market trades at a record high price. The cryptocurrency is evolving. While it started as a currency for nerds, it is now penetrating the mainstream and commanding greater respect in the world of finance.
With a bitcoin-friendly ecosystem encouraged by the Japanese government, it should be expected that many more innovations from companies such as Fisco will emerge. Tashiro even hinted to Bloomberg that the company will experiment further with its ‘bitcoin bond.’