Japan the Next Country to Mint a Digital Currency?

The issues under discussion include how the Japanese government embracing a central bank digital currency (CBDC) would impact the world economy. Despite the rise of numerous crypto exchanges, the U.S. dollar continues to be the de facto global currency.

With finance ministers and central bank governors having recently discussed cryptocurrency regulations at the G-20 summit, Japan is taking notice at home.

Leaders at the Bank of Japan (BOJ), Ministry of Finance (MOF), and Financial Services Agency (FSA) have held a number of meetings to determine whether the country should become next in line to adopt a government-sanctioned digital currency.

Japan has always been a leader for cryptocurrency

As the birthplace of cryptocurrency, Japan has often been ahead of the global pack when it comes to utilizing blockchain technology. Its economy might well benefit most from adopting a digital currency. However, like other countries, it is facing the same concerns over hacking, financial crimes, and money laundering as such currencies become more widespread.

The latest meeting to address such issues was held in January. Among those in attendance were Ryozo Himino, FSA vice minister for international affairs, Yoshiki Takeuchi, vice minister of finance for international affairs, and Shinichi Uchida, BOJ executive director for international affairs.

The BOJ in particular plans to be prepared for issues related to Japan adopting a digital currency. Governor Haruhiko Kuroda previously stated there was no demand for a state-sanctioned digital currency in Japan, but still recognized one could arise once the regulatory challenges and risks were properly addressed:

“We are advancing research and study from the technical and legal perspectives so that we will be able to move in an appropriate way when there is a growing need.”

Other countries are well on their way to adopting digital currency

Developments abroad may be fueling these discussions in Japan. The People’s Bank of China began a two-year pilot program to assess digital yuan transactions. Beijing has made it clear any digital currency in China would complement the yuan, not replace it.

The Bank of England, the European Central Bank, and central banks in Sweden, Canada, and Switzerland have announced they would conduct a joint study on digital currencies with the Bank for International Settlements. Meanwhile, the U.S. Internal Revenue Service is preparing to hold a cryptocurrency summit in March.

Japan’s Financial Watchdog Certifies Two Cryptocurrency Regulatory Organizations

Japan’s Financial Services Agency (FSA) has certified two local organizations as Certified Financial Instruments and Exchange Associations.

According to an April 30 announcement, the FSA has recognized the Japan STO Association and the Japan Virtual Currency Exchange Business Association (JVCEA) as self-regulatory groups for derivative transactions and security token offerings of crypto assets. JVCEA will subsequently be renamed the “Japan Crypto Asset Trading Business Association” on May 1.

JVCEA is the official self-regulatory organization for the cryptocurrency industry in Japan authorized to create regulations and policies for cryptocurrency exchanges in the country.

Cointelegraph has reached out to JVCEA for comment but has not received a response as of press time.

Recent crypto developments in Japan

As of March, there were 21 registered and licensed exchanges in Japan, with three additional companies registered as second-class members. These were major American crypto exchange Coinbase, Digital Asset Markets and Tokyo Hash.

In January, the FSA officially proposed cutting the leverage cap for cryptocurrency margin trading. The FSA reportedly planned to put the order into practice in April once a revised version of the Financial Instruments and Exchange Act enters into effect.

JVCEA enacted a leverage cap of 4x last year, after which some cryptocurrency exchanges in the country reduced their rates. However, some local economic experts suggested that the rate should be further lowered to 2x in order to match those in other jurisdictions such as the European Union.

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