Blockchain, News & Updates

Japan on Blockchain Regulation; an Evolving View

September 2, 2020

Considering the COVID-19 pandemic as a potential use instance for blockchain, Japan’s officials can sign the technology’s superior overall implementation.

The stance on blockchain regulation of Japan appears to be softening. In the past week, Taro Aso, Japan’s Prime Minister, called for superior collaboration between controllers and the country’s blockchain community to recover governance, despite resistance between the two.

“In the blockchain community, some people may still look at regulators with a sort of hostility,” said Aso, Japan’s finance minister, during the Blockchain Global Governance Conference in Tokyo. “It may stem from the assumption that the regulators lack technological understanding and thus could hinder innovation.”

He also added, “What is needed is for all of us to get together and work together to design the proper use of technology under better governance.”

Taro Aso added that blockchain could play an imperative role in trade finance, building a more sophisticated digital identity system and the COVID-19 crisis.

“In the current fight against the widespread epidemic, blockchain could provide a resilient solution to contact-tracking with a high level of privacy protection. It will certainly enhance our ability to prevent and mitigate future risks.”

Asia shifting to CBDC

The universally flattering view of blockchain and cryptocurrency among the country’s regulators isn’t affected by Aso’s comments.

Last month, Commissioner Ryozo Himino, the incoming head of Japan’s Financial Services Agency (FSA), has argued that the deregulation of digital resources may not help the technical revolution and that the country should effort on the central bank digital currencies (CBDCs) instead of cryptocurrencies like Bitcoin.

“In the end, Japan must think really hard about whether to issue CBDCs because there are merits and demerits to doing so. What it can do now is to be ready so that when Japan decides to issue CBDCs, it can do so straight away,” he said.

China’s digital currency electronic payment (DCEP) electronic renminbi’s progress has loosened Japanese regulators’ attention to creating its own central bank digital currency (CBDC), the electronic yen.

In January, Aso expressed that it would be a “very serious problem” if China’s DCEP gains traction as a means of international settlement. Japan’s transactions are mostly settled in dollars.

The coronavirus pandemic also has played a role in boosting interest in digital yen, as cashless payments can help control the virus’s spread. In mid-July, the Japanese government urged the Bank of Japan (BOJ) to look closer into expanding the currency.

“The BOJ will coordinate with other countries to consider CBDCs by examining and verifying technological tests,” conferring to the country’s annual policy roadmap.

Regardless of Japan’s Prime Minister Shinzo Abe’s resignation, Aso’s part in its future financial plans could endure affecting blockchain and related industries. Aso said to the local news agency that he does not plan to join the race to get ahead of Abe.

Troubled Crypto History in Japan

Following several cryptocurrency scandals in the country, Japan has shifted toward grander regulation and mounting interest in fundamental digital ledger technology. It also includes the collapse of Bitcoin exchange Mt. Gox, which saw 740,000 Bitcoin, which is currently amounting to $8.6 billion, was stolen from users.

Lately, the Tokyo District Court announced the upcoming seizure of a portion of cryptocurrency assets, which were stolen during a 2018 occurrence on Tokyo-based exchange Coincheck Inc.

Believed to be the first case of crypto seizure in Japan, nearly 4.8 million yen (US$45,000) in both XEm and Bitcoin will be confiscated. Coincheck has hacked again in May this year, but there was no stolen crypto.

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