Japan Weighs Bitcoin for Reserves but Declines Over Security Concerns

Key Takeaways

• Japan has declined the idea of a national Bitcoin reserve, citing its volatility.
• Prime Minister Ishiba Shigeru expressed concerns over Bitcoin’s instability as a foreign exchange reserve.
• The Bitcoin reserve debate has gained traction in the U.S., spurred by President-elect Donald Trump’s proposal.

As the concept of Bitcoin reserves gains momentum globally, fueled by U.S. President-elect Donald Trump’s recent proposal to incorporate Bitcoin (BTC) into the national treasury alongside the U.S. dollar, Japan has made it clear it is not on board with the notion—at least for now.

Japan Cites Volatility in Rejecting Bitcoin as a Reserve Asset

Prime Minister Ishiba Shigeru responded to Senator Hamada Satoshi’s questions about the growing international interest in Bitcoin reserves, particularly the movement in the U.S. and other countries.

Shigeru explained that the idea is still in its early stages in the U.S. and is difficult to assess.

He emphasized that assets like Bitcoin don’t meet the criteria for foreign exchange assets, which aim to stabilize markets and ensure liquidity.

He also noted that Japan’s foreign exchange reserves are designed to manage currency-denominated assets and bonds—far removed from the unpredictable nature of Bitcoin.

Shigeru reaffirmed Japan’s conservative stance, stressing that the government prioritizes the stability and liquidity of its reserves, something that Bitcoin’s volatility would undermine.

This decision aligns with Japan’s previous reluctance to approve Bitcoin-based exchange-traded funds (ETFs), further highlighting its cautious approach to cryptocurrencies.

Global Momentum for Strategic BTC Reserve, But Challenges Persist

Despite Japan’s opposition, the notion of national Bitcoin reserves continues to gain traction worldwide.

In the U.S., the debate has intensified since Trump proposed the idea.

However, U.S. Federal Reserve Chairman Jerome Powell recently stated that Bitcoin is not yet a viable treasury reserve under current laws.

It remains uncertain whether Trump will pursue the idea through an executive order once in office, but the process is expected to take time.

On the state level, some U.S. lawmakers in Texas, Pennsylvania, and Ohio have already proposed the creation of state-backed Bitcoin reserves.

Additionally, Russia has also expressed interest in establishing a strategic Bitcoin reserve, adding to the global momentum behind the idea.

Though challenges remain—particularly surrounding regulatory and legal hurdles—corporations have already started accumulating Bitcoin in their treasuries.

Companies like MicroStrategy, along with more than 60 other public firms, have embraced Bitcoin as part of their financial strategy, signaling the growing acceptance of the asset as a store of value.

The idea of a national Bitcoin reserve, while still in its infancy, reflects the evolving discourse around Bitcoin’s role in global finance.

However, as Japan’s stance makes clear, the widespread adoption of Bitcoin as a sovereign reserve asset will require overcoming significant barriers to stability and regulatory frameworks.