What makes a currency “real?” Is it any given government or just the imagination of the people who chose which currency they want to use? In Japan, the Cabinet has recognized that virtual currencies, including but not limited to Bitcoin are in fact similar to real money and the implications for Japan and the countries around the world it does business with could be huge.
The set of bills that the Japanese bill set forth to recognize virtual currencies was meant as a measure to help banks expand their information technology capabilities to both cope with the growth of digital currencies and possibly capitalize them in a competitive and fast moving Fintech market.
The bill will offer assistance to regional banking groups to help them consolidate their fund and and system management technology after they have re-aligned to the new standard as well as increase business efficiencies around the new technologies and systems.
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In Japan, digital currencies will be recognized as asset-like-values that can be used to make payments as well as be transferred digitally. In efforts to prevent money laundering, digital currency exchanges will need to register within Japan and report to the Financial Services Agency as their governmental regulator. It is unclear what specific applications of current law will be held to standard in regulating digital currencies in monitoring them for money laundering, fraud and even terrorist funding.
Japan’s latest attempt to get ahead of the curve on matters of digital currency come behind Mt Gox’s scandal within their borders. This move could be a wise one on Japan’s part as not only to stave off potential financial disasters associated with bad digital money management but could also be a fantastic opportunity to spur financial technology innovation within its private sector.
With major banks and governments all over the world making it no secret that they’re interested in and some even being fully-on-board with digital currencies and blockchain technology, Japan very well could find itself ahead of the pack if it can mobilize its already massive world-leading economy into a more digital oriented future.