An established Japanese corporation has begun offering loans secured by cryptocurrency. The company says this is the first service in Japan where loans in Japanese yen can be obtained with cryptocurrency as collateral.
Also read: Yahoo! Japan Confirms Entrance Into the Crypto Space
New Loan Program
Abic Corporation announced Friday the launch of its bitcoin loan service. “From June 1, we offer loans with virtual currency bitcoin (BTC) as collateral,” the company’s announcement reads.
Founded in 1973 and headquartered in Tokyo, Abic Corporation offers a broad range of secured loan products including commercial and real estate loans.
“In Europe and the United States, services that provide ICOs [Initial Coin Offerings] and loans are increasing, with virtual currency as collateral such as bitcoins,” the company wrote, elaborating:
Bitcoin secured loan is a service where [customers] can receive loans using bitcoin as collateral as its name implies, but it is Japan’s first service to receive [crypto-secured] loans in Japanese yen.
One major benefit of obtaining this type of loan is that, in Japan, “In the case of individuals, if you sell your own virtual currency, the [capital] gains on that sale will be miscellaneous income and will be subject to progressive taxation,” the company explained. This tax can be as high as 55%.
Emphasizing that its crypto secured loans give customers access to funds without having to sell their crypto, the company urges customers to use its crypto secured loans “for a wide range of purposes such as new virtual currency purchases, [and] tax payments.”
Recently, news.Bitcoin.com reported on Japan’s National Tax Agency revealing that 331 taxpayers with 100 million yen (~US$914,000) or more in miscellaneous income, excluding pension income, declared cryptocurrencies in the year 2017.
The crypto secured loans by Abic Corporation are available for both businesses and individuals. The loan amounts are between 2 million (~US$18,260) and 1 billion yen (~$9.13 million) with annual interest rates ranging from 2.98% to 15.0%.
Customers can borrow for a period of between one month and five years. Loans can be repaid in up to 60 installments with no prepayment fee. The delinquency charge is 20% annually.
The company detailed:
We will keep your [cryptocurrency] deposit and set the pledge…As a general rule, pledges are set in the virtual currency of the collateral, but it is possible to sell as soon as the market price rises.
Furthermore, the company assured that while holding bitcoins as collateral, customers will still receive any forked coins that may split off during that time. “Even if you receive loans with bitcoins as collateral, there is no worry that the right in division will be lost,” Abic reiterated. This week, news.Bitcoin.com reported on a group of lawyers preparing a class action lawsuit against crypto exchanges in Japan that do not grant their customers their forked coins.
What do you think of crypto-secured loans? Let us know in the comments section below.
Images courtesy of Shutterstock and Abic Corporation.
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