An Insider's comments on Japan's high tech business world

* * * * * * * * TERRIE’S TAKE – BY TERRIE LLOYD * * * * * *
A weekly roundup of news & information from Terrie Lloyd, a long-term
technology and media entrepreneur living in Japan.

General Edition Sunday, Feb 18, 2018, Issue No. 932

– What’s New — Is the Cryptocurrency Challenge Too Hard for Japan’s FSA?
– News — Corruption Charge Against Olympic Bid Company
– Upcoming Events
– Corrections/Feedback
– Travel Picks — Top 3 Things to Do in Tsuruoka, Guide to Sake in Niigata
– News Credits

SUBSCRIBE to, UNSUBSCRIBE from Terrie’s Take at:



Over the last couple of weeks, it has been interesting to watch the
Japanese Financial Services Agency (FSA) and others swing into action
over the massive hack of Coincheck, and yet surprisingly there hasn’t
been a hint of discussion about banning cryptocurrencies as being too
risky. Normally in a new sector as wild and western as NEM and Bitcoin,
especially after a half billion dollar heist, there would be a
significant negative reaction by the Japanese financial authorities –
typically in the direction of shutting down the sector or at very least
the company. But instead, we are seeing the authorities doubling down,
continuing with their certification of the remaining 16 cryptocurrency
exchanges (16 are already certified) and encouraging trust banks to
promote the idea that they can take a custodial role in handling these
new assets.

Our guess, and this is pure speculation on our part, is that several
years ago the Prime Minister’s Office and the Ministry of Finance
jointly decided that in order to reverse the hemorrhaging of foreign
financial firms from Tokyo to Hong Kong and Singapore, they had to
promote a slice of the financial sector that isn’t driven by traditional
banking mores. In particular, a slice that isn’t driven by high-paid
foreign bosses who want to locate their financial operations in low-tax
jurisdictions but where they can still enjoy the high life.

When you look at the personnel and property overheads of those
traditional financial firms, Japan is at a severe disadvantage because
its large indigenous population needs the higher tax rates to maintain
minimum public services. In contrast when you look at the needs of
purely web-based financial firms, like those in the cryptocurrency game,
then the HR/property cost silos are insignificant and the higher tax
rates are offset by the benefits of a sound digital infrastructure and
exposure to a large local investor market. Then of course there is
“nearby market” for which, unlike Singapore and Hong Kong, Japan is
large enough and diversified enough not to be bullied by anti-crypto
forces in China and S. Korea.

Just how much pain the Japanese authorities will put up with in order to
realize their vision of building a high-tech financial sector in the
crypto space is hard to say. They must already be really unhappy with
the fact that Coincheck is the second major hack to have hit a Japanese
cryptocurrency exchange in the last four years, the first being Mt. Gox
in 2014. What is notably different this time around is how they are
treating the management of the errant company. No jail time and no
accusations of internal fraud, even though internal fraud is entirely
possible in Coincheck’s case as it was in Mt. Gox’s.

——— From Veggie Burgers to Carrot Cake ————–

Our commitment at Alishan Organics is to give our customers the best of
western organic foods, but prepared with a Japanese twist. That’s why
our menus cover such a broad range of styles and tastes. If you’re just
getting to know us, why not visit our cafe by the river in Saitama? That
way you can try out a variety of dishes and decide for yourself. Choose
from an Amy’s organic pizza straight from the oven, a mouthwatering
veggie burger packed with seasonal greens and reds, or if you’re feeling
chilly, a filling vegetable curry with rice. And although we’re healthy
minded, we don’t skimp on desserts. Favorites include Jack’s scrumptious
carrot cake, vegan brownies (of course with vegan icecream), and baked
banana cheese cake.

Our Cafe:
Our new online store:

[…Article continues]

Actually, let us re-phrase that. We find it difficult to believe that
Coincheck has been allowed to stay in business, and find the whole thing
a bit fishy. Is there something going on behind the scenes that the
public is not privy to? For example, how is it possible for Coincheck to
offer compensation for the victims of the hack, all 260,000 of them,
when they only have about JPY200m in capital (assuming the numbers on
their corporate website)? You have to wonder where they are getting the
money for this. Is there a supply of funds (like the industry guarantee
pool that the travel sector has) from the government that isn’t being

As a side note on the Mt. Gox bankruptcy, the government-appointed
receiver is currently holding the remaining assets of the company, which
is mostly comprised of a cold wallet containing 202,000 Bitcoins. Back
in 2014 the coins were worth about US$500 each, but as of yesterday were
worth US$10,580 each – a factor of 20x appreciation. What will burn the
original investors is that they only get back the value of their assets
when the company went into liquidation, i.e., the US$500 per coin. The
remaining US$1.8bn (approx.) of Bitcoin value is supposed to be returned
to the Mt. Gox holding company shareholders – namely, 88% to founder
Mark Karpeles. We’re willing to bet that this sum is juicy enough that
the government will take a shot at issuing a large fine to cover “costs”
before anything is paid to Karpeles..

Also interesting is a recently filed lawsuit in the USA claiming both
Karpeles and Mizuho co-defendants. Black eye for Mizuho here. [Lawsuit against Karpeles-Mizuho]

The cause of the Coincheck theft appears to be sloppy security
management, where substantial amounts of funds held by the firm’s many
investors were being kept in hot wallets connected to the Internet. This
was a surprising practice because as an exchange, of all players, they
should know better than to leave customer assets unnecessarily exposed
to the internet, where hackers lurk. If there is one thing that
cryptocurrency firms around the world are learning quickly it is that
despite having the best security engineers available, there is always
going to be someone out there who has the time, motivation and
creativity to come up with an exploit that is unimagined and
unanticipated until it is perpetuated. In other words, you don’t put all
your eggs in an exposed basket where they can be hacked all at once.

This raises another issue, which is whether the Japanese software
security industry is sophisticated enough to reliably offer
cryptocurrency services in the first place. Online exchanges are natural
magnets for hackers because the assets they handle have anonymous
owners, allowing anyone smart enough to steal those assets to stay
unknown to the authorities after the theft. This is a huge temptation
for all and sundry. Then of course, there are the many state-sponsored
hackers who are actively encouraged and rewarded by their governments
for attacking “those nasty Japanese”. Indeed, the latest speculation is
that the entity hacking Coincheck was North Korea.

The FSA appears to be presenting the public the story that it is in
charge and with its oversight, know how, and experience, everything will
be OK. We don’t think so. Particularly risible is the announcement that
the FSA will expand its onsite inspections to all of the virtual
currency exchanges that are either already licensed or are expected to
be soon. It says that it will check each exchange’s risk management
system (systems infrastructure and separation of cash and crypto
assets). Oh, really? Do the FSA folks understand that the biggest risk
is that they are in a business where the risks are not fully discovered
yet and another massive theft is only as far away as the next smart
hacker’s exploit? And what about those platforms that don’t use a
centralized exchange (but which are more secure than a centralized
exchange)? How will the FSA regulate those?

That the FSA thinks it can ride this tiger by the tail shows, in our
opinion, how unprepared it really is. Still, if the FSA does set up a
compensation fund while exploits continue to be discovered and
eliminated, that would be a good thing for consumers and it would
certainly attract a lot of investment attention from overseas.

In the longer term, though, we think the FSA should convince the Prime
Minister’s office to sponsor a new generation of white hats working
either for the government directly or for a suitably endowed local
technology institution (preferably one with strong international
scholarly and technology links) so that as the field evolves, the
country can keep up with the exploits and deal with them. Better still,
the new engineers may come up with a better way to ID and/or contain the
players behind the transactions, and thus intercept them after a crime
has been committed – all without necessarily compromising the anonymity
features that make cryptocurrencies so popular.

This shouldn’t be impossible, and parallel mechanisms already exist for
traditional securities. Take, for example, Bearer shares issued by the
British Virgin Islands and similar jurisdictions. In these locations,
anonymity is protected right up until a crime is proven in court, and
thereafter the court can force the release of information on who holds
those shares – upon pain of seizure of the company and/or its assets by
the government if the order is not complied with. Crypto could work in a
similar vein, with criminally obtained assets being tagged as being
illegal, non-tradable, and seizable (one supposes the government would
hold a master key that allows them to overwrite ownership of assets,
even though they don’t know who owns them). The NEM oversighting
organization in Singapore has already tagged the stolen Coincheck coins
to inhibit downstream transactions with them.

Japan has been a leader in the financial sector in the past, when it
invented the Zengin Net banking system back in the 1970’s, and touchless
payment card system (such as Sony’s Felica) in the 1990s, so they are
capable of moving fast and thinking far ahead when they want to.
However, the difference between then and now is that this time around
there are no devices involved and thus Japan’s core manufacturing
expertise is not relevant. Instead, the new currency systems are 100%
software and they are shared/decentralized. Thus, Japan needs to
redouble its efforts to train a generation of software engineers who can
think quickly and creatively, and realize that regulation alone will not
be enough.

…The information janitors/


———— Japan Travel Group Tour Services ————-

Japan Travel’s Type-2 licensed travel agency business is one Japan’s few
independent foreign-owned inbound DMCs. Our specialty is looking after
groups of 10-30 people, and we have already assisted schools,
businesses, special interest organizations, and extended family groups.
If you are responsible for managing an inbound company incentive tour or
management training, we can help create unique experiences from a blend
of memorable destinations, dining, activities, guides, and transport

If you have a group needing assistance, we invite them to contact us at:
Or visit our pages at:

+++ NEWS

– Yen is undervalued by 20%
– Optional Pensions Will Start at 71
– 62% of bank loans carry 1% or lower interest rate
– Corruption Charge Against Olympic Bid Company
– Yet another bikesharing company

=> Yen is undervalued by 20%

The currency strategists at Societe Generale have said that the yen is
effectively undervalued by about 20% (they were referring to the yen’s
real exchange rate versus its long-term average). They also said that
the national trade-weighted index is about 3% below its multi-year
average – meaning that the yen is likely to strengthen in the long-term
on current fundamentals. The yen rose to JPY106.84 to the Dollar on
Friday, and has now risen about 5% since January 1st. (Source: TT
commentary from, Feb 14, 2018)

=> Optional Pensions Will Start at 71

While the retirement age is gradually moving up from the current 62
years old to 65 (it’s being raised in stages), a little known pension
option is setting a new high bar in terms of age to collect your
pension. The labor ministry has just approved a plan to raise the upper
age a person can optionally start to collect their retirement allowance,
to 71. Currently the law sets the upper age as 70, with those opting to
start at 65 or higher getting a higher monthly payout than those
starting at 60 – due to the fact that payouts are based on a percentage
of lifetime pension contributions. ***Ed: Although the government is
saying it won’t uniformly push up the retirement age from 65, we’re
willing to bet that this is just a trial balloon and that Japan will
shortly follow the UK in boosting the standard retirement age.**
(Source: TT commentary from, Feb 16, 2018)

=> 62% of bank loans carry 1% or lower interest rate

Japan is certainly the place to be if you want a bank loan. According to
the Nikkei newspaper, of the roughly JPY471trn in loans made by banks in
2017, a full 62% of them earned the bank an interest rate of less than
1% annually. In fact, only 10% of loans – mostly to consumers and small
businesses – had interest rates of more than 2%. ***Ed: The whole
lending situation is a downward spiral. The companies that actual need
loans, Small- to Medium-sized Businesses (SMBs) are unable to get them
without making onerous personal guarantees which could potentially ruin
the company founders. And because the banks are not making profits
lending, they are becoming even more risk averse. To break this cycle
and increase lending to those who actually need it, the government
should reverse it’s downgrade 5 years ago of loans protection for SMBs
(the government currently covers 80% of loan liabilities, the bank owns
the other 20%) and also set specific lending targets to this type of
customer.** (Source: TT commentary from, Feb 16, 2018)

=> Corruption Charge Against Olympic Bid Company

The shady Singaporean company that the Tokyo government allegedly paid
two million dollars in consulting fees to, has just had its CEO Tan Tong
Han found guilty of corruption. His company, Black Tidings, is suspected
to have paid US$1.4m bribes on behalf of Japan to influential sports
figures in various African nations to swing the selection of Tokyo as
the host city for the 2020 Olympics – although the charge last week was
over Tan lying about related funds payments, to the Corrupt Practices
Investigation Bureau. Tan is believed to have channeled the Tokyo
payments to Papa Diack, the son of the former IAAF President, Lamine
Diack. ***Ed: Meanwhile the French police continue their investigation
as to whether Tokyo was involved in the bribes. This could all get
rather embarrassing, even if the Japanese are only accused of
naivete..** (Source: TT commentary from, Feb 15, 2018)

=> Yet another bikesharing company

On February 14, yet another bikesharing company entered the busy
Japanese market, launching a new service that will start from Fukuoka.
The new player is flea market operator and Internet “unicorn” Mercari,
and the new service is called Merchari. The company will start out with
400 basic bikes provided from 50 ports around the city, although it
plans to spread across the country. The service will be ultra-cheap,
starting out at just JPY4/minute. ***Ed: While Mobike, OFO, and Softbank
are also competing in this space, it remains to be seen whether these
new services will be all that popular, as they will have to compete with
DoCoMo, which has already tied up with a number of cities around the
country. Being tied to a city means bike portals can be located on city
sidewalks, and not just on the private grounds of a commercial partner.
Indeed, the shortage of bike parking space and also the likelihood that
cities will start complaining as the bikes are being left in random
places by Chinese tourists, is likely to present a major hurdle to new
Japanese players. On the other hand, of course, these low-end bikes are
just 25% of the cost of a DoCoMo electric chariot, and so thrifty local
users may also find that compelling.** (Source: press
release, Feb 13, 2018)

NOTE: Broken links
Some online news sources remove their articles after just a few days of
posting them, thus breaking our links — we apologize for the inconvenience.


——— Micro Loans Program in South Pacific ————

SPBD and MicroDreams seek to combat poverty in the South Pacific by
enabling women to become entrepreneurs. These women apply for small
loans, as low as US$120, to launch, grow, and maintain small businesses.
Previously, many of our clients did not have a stable source of income
to support their families. We work alongside these hardworking women,
teaching them essential business and financial skills to expand their
businesses and generate steady income and improve their quality of life.
With our program, these women turn dreams into reality as they reap the
rewards of their efforts.

Read about our remarkable clients at You can also donate to the
program at:


——— UK/Germany Japan Travel Seminars ————–

Title: “Latests Trends in Japan’s Inbound Travel Boom”
A series of free travel seminars in the UK and Germany, by Terrie Lloyd

Japan is in the midst of the world’s largest inbound travel boom in the
last 20 years. From 2011 until 2017, the number of inbound travelers has
increased 450%, from 6.2m to 28m (estimated) by March 31st this year.
What is exciting about this US$40bn+ travel boom is that more than 50%
of the market is held by non-Japanese firms, and that means great
opportunities for UK and German firms as the growth continues.

As founder and CEO of one of Japan’s top inbound travel sites,, Terrie Lloyd is at the forefront of the market,
helping to make and shape trends as the market evolves. His particular
focus is on repeat travelers, who now account for more than 55% of the
flow, and who are demanding more specialist experiences that typically
define a maturing market. His presentation will share the latest news on
what trends are emerging, and where the opportunities lie for UK and
European firms.

Terrie will give some specific examples of new travel products and
services now under development, particularly highlighting hiking and
trekking trails in Kyushu, a still-underdeveloped part of Japan (read,
low cost, great food, and no hordes of tourists)

Speaking Locations
Seminar 1: London, UK, Monday March 5th in the London CBD (Location to
be advised)
Seminar 2 & 3: Berlin, Germany, Thursday March 8th at a location close
to the ITB expo (Location to be advised)

The seminars are free of charge. Other details will be confirmed as they
come to hand. Interested attendees can reserve a space, by emailing us


No events or corrections this week.



=> Top 3 Things to Do in Tsuruoka City, Yamagata

Designated a UNESCO Creative City of Gastronomy in 2014, Tsuruoka is
blessed with abundant nature thanks to its location on the Shônai plain
in Yamagata Prefecture. The top three things to do in Tsuruoka area are,
in our opinion, the following.

1. Dewa Sanzan
The three sacred mountains of Dewa Sanzan let hikers follow the old
pilgrimage route that links Mt. Haguro, Mt. Gassan and Mt. Yudono.
Considered highly significant to Shintô, Buddhism and Shugendô (a
syncretic form of Buddhism and Shinto) pilgrims can worship the mountain
deities that exist in all things in nature. Dewa Sanzan originally
opened as a religious center in 593 by Prince Hachiko, the son of the
Emperor Sushun. The Sanjin Gôsaiden shrine, the largest structure in
Japan with a thatched roof, opened in 1818.

2. Kamo Aquarium
Rebranded and relaunched in 2014, Tsuruoka’s once struggling Kamo
Aquarium is now a state-of-the-art attraction, renowned for displaying
the largest jellyfish collection in the world. It has no less than 50
different species of jellyfish, according to the Guinness World Record.
The aquarium has a 5 sq. m. tank called the “Jellyfish Dream Theater”,
which features 50 species in the same space. Oh, and you should try the
jellyfish ice cream!

3. Zenpoji
Surrounded by the Dewa Sanzan mountains, Zenpoji is a Buddhist temple
founded in the Heian period. Visitors can view prayers throughout the
day and take part in Zazen meditation. One of the temple’s many
impressive buildings registered as Tangible Cultural Properties, is the
impressive 5-storey Sanmon pagoda, which was rebuilt in the 1860s.

=> A Guide to Sake in Niigata City

Niigata Prefecture is home to some 90 sake breweries and is famous for
producing some of the country’s top quality sake. In Niigata City, there
are many ways to experience sake from large-scale events, brewery
visits, to gourmet dining.

* Sake tasting event
Niigata’s Sake no Jin Festival is an annual two-day event held on the
second weekend of March. It was created in 2004 to introduce people from
outside of Niigata to sake, while also introducing Niigata’s local food
and culture. People can enjoy over 500 brands of sake from over 90
brewers. There are also cultural performances and seminars. Be warned
that it can get crowded – with about 120,000 visitors last year.

* Visiting a brewery
Since 1767 the Imayotsukasa Sake Brewery has been brewing sake using
traditional methods – in particular, without artificial ingredients. The
brewery is open year-round to the public and offers free tours to take
you through the brewing process and its history, concluding with a sake
tasting session. It is possible to do the tour in English if you request
it in advance.



SUBSCRIBERS: 6,358 members as of Feb 18, 2018 (We purge our list regularly.)


Written by: Terrie Lloyd (

HELP: E-mail with the word ‘help’ in
the subject or body (don’t include the quotes), and you will get back a
message with instructions.

Send letters (Feedback, Inquiries & Information) to the editor to

For more information on advertising in this newsletter, contact

Get Terrie’s Take by giving your name and email address at, or go straight to
Mailman at:


Copyright 2018 Japan Inc. Communications Inc.

—————– Japan Inc opens up Japan —————-

J@pan Inc authoritatively chronicles business trends in Japan. Each
posting brings you in-depth analysis of business, people and technology
in the world’s third largest economy.

Visit for the best business insight on Japan available.

Terrie mailing list