Line Corporation, the Japanese subsidiary of South Korean internet giant Naver Corporation, announced last Friday that they will be issuing their own cryptocurrency this September. It now appears, however, that Japanese and US based customers will not be able to use the new cryptocurrency due to licensing requirements.
The upcoming cryptocurrency – called LINK – will not be issued through an ICO, but will rather be a reward for users that use certain features on the Line messaging app. It will be made available for trading on Line’s cryptocurrency exchange, BitBox, in which users can trade “Links” that they acquire by using the app.
Line explained the issuance process on their website, saying:
“Unlike other cryptocurrencies or digital tokens, LINK will not make an Initial Coin Offering (ICO), but instead utilizes a reward system that gives users LINK as compensation for using certain services within the LINE ecosystem. For example, a user who has joined and participated in one of the decentralized app (dApp) services related to LINK can receive LINK as incentive. That LINK can then be used as payments or rewards within the dApp services that will launch soon, and for service categories like contents, commerce, social, gaming, exchange and more within the LINE ecosystem.”
Line’s BitBox Exchange yet to Receive Licensing from Japanese Authorities
Because 75 million of Line’s monthly active users are based in Japan, many investors feel that the ban on Japanese customers from using Link could undermine the utility of the cryptocurrency. This could change, however, in the near future if Line’s cryptocurrency exchange, BitBox, receives proper licensing from the Japanese Financial Services Commission (FSA), who has yet to inspect and approve the exchange.
The FSA has been clamping down on cryptocurrency exchanges following the $500 million Coincheck hack that occurred earlier this year. The hack highlighted the need for greater regulatory scrutiny on exchanges by authorities. Since then, the FSA has significantly increased their requirements for exchange licensing and are now conducting on-site inspections of applying exchanges.
If approved, the Singapore based exchange will be able to open its doors to Japanese Line users, who will be able to buy and sell their Links. Currently, however, those residing in Japan will still be able to gather a Link alternative, called Link Point, which will be exchanged to Link once BitBox receives licensing.
Line explained how Link Point will work:
“For residents in Japan, LINK Point will be received as rewards for activities in dApp services instead of LINK. Japanese users can use LINK Point within dApp services or change it for LINE Points. However until LINE gets authorization for cryptocurrency trading and exchanges by the regulatory authorities in Japan, LINK Point cannot be deposited, withdrawn, transferred, traded or exchanged at cryptocurrency exchanges, including BITBOX.”
There will be a total of one billion issued Links, 800 million of which will be available for user reward payouts, and 200 million of which will be kept in Line’s reserve, and gradually released based on how the ecosystem develops.
Link will be used to pay for content on Line’s various platforms, like music, videos, as well as for commercial purchases. Users will also be able to send Link between one another for rapid peer-to-peer transfers with no fees.
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