Freeze! Japan Cryptocurrency Business Association Prepares For Bitcoin Fork

Japan’s Cryptocurrency Business Association (JCBA) has begun preparing for the looming bitcoin fork that is expected on August 1. The association brings together leaders from banks, securities firms, exchanges, and other virtual currency businesses in Japan. It counts board members from Kraken, Coincheck, and Money Partners among its ranks. The association is chaired by director Tadayoshi Okuyama.

Ahead of the user activated soft fork on the Bitcoin blockchain, the JCBA has issued guidance to key stakeholders and association members. Through a freeze, the association hopes to protect customer assets. The halt in trading may last anywhere from one day to a full week.

However some exchange operators (including Bitbank and Tech Bureau) will allow trading to continue, simply suspending deposits and withdrawals until the dust has settled from the fork. As of this publication, the country’s largest bitcoin exchange, BitFlyer, has not chosen a course of action.

As demonstrated by the GDAX flash crash, thin trading books could threaten investors. With this in mind, it’s vital for bitcoin exchanges (in Japan and worldwide) to plan for a few contingencies.

First, companies ought to keep their customers apprised of the fork’s implementation and the timeline for exchange freezes, if applicable. Next, the exchanges should provide customers with sufficient time to withdraw their investments if desired. After the fork, companies ought to provide a roadmap for which chain (or chains) they will support. This will help restore investor confidence and ensure that customers receive exactly what they are due. Coordinating disbursement of fork funds may prove challenging initially, so it’s crucial to keep customers in the loop.

The US-based GDAX has already taken that step, posting on its blog about the company’s intentions to “implement safeguards” for addressing the fork.

Fortunately, for the most part, Japanese exchanges also appear to be proactive in their preparation. At this point, it’s virtually impossible to determine which Bitcoin blockchain will become dominant – or how market share will be impacted. Still, investor protection should remain a priority for all.