Japanese regulators have proposed considering and treating virtual currencies like bitcoin as methods of payment and settlement similar to conventional fiat currencies.
A report by Nikkei revealed that Japan’s Financial Services Agency (FSA) is considering legislative revisions that would recognize bitcoins and other digital currencies as equivalents to conventional currencies. The publication cites that the revisions see bitcoin as “fulfilling the functions of currency”.
An excerpt from the publication reads:
Under the FSA’s proposed definition, virtual currencies must serve as a medium of exchange, meaning that they can be used to purchase goods and services. They must also be exchangeable for legal tender through purchases or trades with an unspecified partner.
As things stand, bitcoin and virtual currencies are recognized as “objects but are not treated on par” with established traditional currencies, in a nod to the Japanese Yen.
The revisions to legislation is also seen as a means to develop the financial technology sector with the proposed status of virtual currencies by the FSA.
If the legislative revisions and the newly proposed definition by the FSA were to go through, digital currency exchanges and other services such as wallet providers who deal in virtual currencies would be required to register with the FSA.
Such regulatory oversight, the FSA believe, would help in avoiding a scenario that befell thousands of creditors during the collapse of Japanese bitcoin exchange Mt Gox. Millions in bitcoin and fiat currencies were lost due to Mt Gox’s insolvency. At the time, bitcoins were treated as ‘objects’ by the Japanese government and were subject to no regulatory purview.
The newly proposed definition comes not long after news of Japan’s first ever cryptocurrency regulations that are reportedly being drafted by the FSA.
The proposed changes will be submitted during the current session of the Diet, Japan’s legislature. The goal of passage of the revised legislations toward bitcoin’s status from an object to a currency is expected to go through the Diet session before this year’s session concludes on June 1st.
Featured image from Shutterstock.