Japan Rallies Behind XRP as Ripple Faces US Litigation

“I’m not selling,” Makoto, a Japanese entrepreneur and XRP investor, told CoinDesk.

Makoto first bought the XRP digital token in 2017, a year after its San Francisco-based issuer Ripple Labs formed a joint venture with one of Japan’s most respected financial services institutions, SBI Holdings Inc.

Soon after, the popularity of XRP rose sharply in Japan.

“XRP was probably the most popular token or cryptocurrency in Japan. It was also supported by SBI. It has invested in Ripple, ”Mike Kayamori, founder and CEO of the crypto trading platform Liquid Global, told CoinDesk.

Now, Japan’s love for XRP is being tested after the US Securities Exchange Commission (SEC) filed lawsuit against Ripple Labs in December 2020. The complaint accuses the company of violating US securities law, arguing that Ripple did not register XRP as a collateral or search an exception before the company began selling it seven years ago.

Japan views XRP as a cryptocurrency, but that does not affect the SEC’s claim that Ripple sold XRP in unregistered securities transactions. Likewise, the U.S. classification of the cryptocurrency is unlikely to have any impact on how Japan handles XRP.

Following filing, a number of prominent crypto exchanges, including Coinbase and Binance, announced that they would be removing or suspending XRP from their US platforms.

XRP has a strong global following and many people see this lawsuit as an attack on virtual currencies in general, Kayamori said.

Ripple declined to comment on the popularity of XRP in Japan.

“I think the crypto community is seeing this as a huge blow to them and as a kind of forerunner of what could come in the future that other companies are also vulnerable,” added Kayamori.

Although XRP is still widespread in Japan, some local XRP users seem a little shaken by the lawsuit.

“A lot of people are sad about the SEC problem these days … I’m very concerned,” Okurisan, another Japanese XRP investor, told CoinDesk on Twitter. He said he sold most of his XRP after learning of the lawsuit.

The influence of SBI, Ripple’s marketing, and relatively clear regulation that classified XRP as a cryptocurrency are driving XRP’s popularity in Japan.

Okurisan, for example, said XRP would “rise” again. Despite the lawsuit, XRP’s price rebounded in early January, thanks in part to retail investors in Asia.

A giant’s blessing

SBI Holdings was founded in 1999 as a subsidiary of the Internet and media conglomerate SoftBank Corporation until the two companies separated in 2006.

According to Masakazu Masujima, a partner in international law firm MHM Global, SBI was founded as an innovation-driven investment arm of SoftBank, and “SBI” originally stood for SoftBank Investment.

Now, SBI Holdings Inc. has nearly $ 950 million in paid-up capital and 8,568 employees, according to its website. In January 2020, the company announced plans for a new $ 920 million venture capital fund, which Nikkei Asia says will be the largest active fund for startups in Japan.

Masujima said SBI’s work as a financial services innovator has earned him the respect of the tech-savvy people of Japan.

“The SBI culture is very innovative. It actually pioneered Japan’s internet-based financial services, from internet-based securities to foreign exchange to virtual currency trading. So the people from the internet are really big fans of what SBI has achieved so far, ”Masujima told CoinDesk.

After the SEC filed a lawsuit against Ripple Labs and companies began to distance themselves from XRP, SBI came to their support and released a statement that XRP is characterized as a crypto asset rather than a security under Japanese financial law.

“SBI Holdings is and will remain a strong partner of Ripple,” said representatives from SBI CoinDesk later by email.

Following the filing, Yoshikata Kitao, SBI chairman and board member at Ripple Labs, tweeted that Japan’s tax authority, the FSA, had already made it clear that XRP was not a security.

“I am optimistic that Ripple will prevail in the final decision in the US,” said Kitao.

The SEC complaint against Ripple Labs alleges that Ripple made “institutional sales” of at least 1.1 billion XRP (valued at over $ 300 million) to SBI from 2018 to 2020.

The complaint includes a 2017 tweet from Kitao, referred to in the document as “Institutional Investor C”, which states, “Wow, XRP up all the time! Forget Bitcoin, we’re all at XRP! ”

In fact, one SBI recommendation is enough: When asked why he invested in XRP, Okurisan replied: “I bought XRP because it is supported by SBI.”


In Japan, XRP was uniquely marketed as a remittance tool, and people on the internet, mostly those who frequently use Twitter, bought XRP because they believed it was the next bitcoin, Masujima said.

With the joint venture SBI Ripple Asia 2016, the US crypto company launched its international transfer and payment processing network RippleNet in Asia.

According to the SBI website, RippleNet uses distributed ledger (DLT) technology to connect users directly to financial institutions and “send money instantly and reliably in 40+ currencies to 70+ countries”.

Makoto told CoinDesk that the speed of the transfer made Ripple’s XRP so attractive.

“The first thing I bought was Bitcoin, but the long wait I had when I moved [exchanges] was painful. XRP is already being used by many banks in international transfers and the system uses far less power than Bitcoin, ”added Makoto.

Between 2018 and 2020, Ripple partnered with financial institutions in a number of countries, including the United Arab Emirates, Malaysia and Brazil, to launch the RippleNet remittance product.


In addition to a strong partnership with SBI and its role in facilitating quick transfers, XRP has been treated as a cryptocurrency under Japanese financial law.

Before the SEC brought the case against Ripple, CEO Brad Garlinghouse considered moving the company out of the United States because the SEC would not state that XRP is a currency and not a security, as the UK tax authorities had done.

Japan was among the countries Ripple considered for the move as XRP is classified as a crypto asset.

“In Japan, all tokens that are listed or available for trading on Japanese regulated or licensed exchanges are already whitelisted or can be used by an administrator in advance,” said Kayamori.

According to the Payment Services Act of 2009, which was changed by a chapter on virtual currencies in 2017, all service providers for virtual currencies had to register and obtain licenses.

Masujima, who often works with the FSA to shape regulation, said the agency views the crypto space as something that can provide “real” financial services. Therefore, according to Masujima, the FSA believes that it should be regulated in the same way as securities, and that the existing regulations on crypto assets reflect this.

Following the SEC filing, the FSA made a statement to crypto publication The Block that the regulator considers XRP a cryptocurrency under the Payment Services Act, although it did not specify whether this precludes XRP from also being considered collateral.

The FSA did not respond to a comment in time for publication.

“If your token is whitelisted as a cryptocurrency according to Japanese guidelines, it means that it is legal. You don’t have to define it further … regardless of whether the US says it is a security or Singapore or Switzerland or any other jurisdiction say otherwise, ”Kayamori said.

Kayamori added he doesn’t think the FSA would reclassify XRP as collateral in light of the U.S. lawsuit, but if it did it would be “a first”.

Joel Edgerton, Chief Operating Officer at bitFlyer USA, a subsidiary of bitFlyer headquartered in Tokyo, told CoinDesk via email that bitFlyer Japan, one of the largest crypto exchanges in the country, will continue to list XRP for Japanese customers based on the regulatory guidelines of their customers domestic regulator. bitFlyer Japan declined to comment.

Although Makoto admitted that he was concerned about the lawsuit, he said that Ripple’s technology continues to be adopted by banks around the world for processing money transfers.

“We [will] don’t sell even if there is a profit, and also after the process problem, ”said Makoto.

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