This post is by Krystle Vermes.
Japanese legislators officially proposed handling virtual currencies as methods of payment on February 23, Nikkei reports. This would mean that virtual money, such as Bitcoin, would become the regulatory equivalent of conventional currency.
Legislators of the financial services industry believe that this move could potentially strengthen consumer protection and create growth in the virtual economy. At the moment, Bitcoin is recognized as “an object,” but it is not considered equal to more established forms of currency.
The proposed changes to the definition of virtual currencies would mean that items such as Bitcoin could be used to purchase goods and services. Additionally, they would be considered exchangeable for legal tender via trade or purchase.
However, acknowledging virtual currency as an equivalent to conventional currency would require certain institutions to register with the Financial Services Agency.
This is not the first time Japan has examined Bitcoin and its global use, as seen in a press conference held in 2014. At the time, Finance Minister Taro Aso addressed how Bitcoin has been treated in Japan, as well as around the world.
“The media may regard it as such, but it is not a currency that everyone recognizes as currency, so I don’t really know whether the Ministry of Finance or the Financial Services Agency should have jurisdiction over something that is not a currency, whether the Consumer Affairs Agency should have jurisdiction because it is used by consumers, or whether the National Police Agency should have jurisdiction because a crime may have been committed,” said Aso. “In Japan, the issue is quite advanced, so for quite some time I have thought that some actions might have to be taken in Japan, though I think that this time has come much earlier than expected.”
Currently, there are more than 600 forms of virtual currencies used around the world. As of February 24, one bitcoin holds the value of approximately 47,000 Japanese yen.
As the prominence of virtual currencies continues to grow, Nikkei reports that monetary authorities are attempting to institute regulations to address issues, such as money laundering.
In 2015, Aso addressed the use of Bitcoin and other virtual currencies for the purpose of funding terrorism and other crimes.
“I think it was at the G7 summit that discussions addressed the need to introduce regulations in order to prevent terrorist funding, tackle money laundering, and so on,” Aso said. “We’ve gathered a lot of information, and I think that the actual ways the currencies are used need to be properly reflected, and I think that studies need to continue concerning an approach.”