According to a Bank of Japan (BOJ) Director-General, things with bitcoin appear to be going relatively well in Japan so far. With increasing calls from world leaders to come together and create a global regulatory framework for cryptocurrencies, Japan has taken a unique approach.
The Bank of Japan decides to go it alone
“There’s undeniably growing interest among global policymakers on how to deal with cryptocurrencies,” said Hiromi Yamaoka, Director-General of Payment and Settlements at the Bank of Japan. Mr. Yamaoka told Reuters that Japan’s approach would be to “think about how to curb excesses without discouraging innovation.”
‘So far, there have been no major issues with Bitcoin,’ says Hiromi Yamaoka of the Bank of Japan.
Indeed, the nearly 7,000-island nation has been a resounding success story for cryptocurrencies, particularly bitcoin, which is now legal in the country. In a sea of countries still unsure what to make of decentralized currencies, the world’s third largest economy is a fine experiment.
The rise in bitcoin’s price, ironically, has only increased regulators’ concerns. Every week, if not every day, there are calls from all over the world to severely restrict, if not outright ban, digital assets. For Japan, caution appears to be the watchword, but it appears to be erring on the side of allowing these new forms of money to flourish first. And Japan is doing so against the backdrop of a growing number of fellow first-world countries seeking global regulation.
So far, everything has gone well
“It’s unclear whether global cooperation would imply global regulation,” the Director-General continued. It could mean coming to a consensus on the risks of cryptocurrency trading and attempting to communicate a unified message. “Global harmonisation does not always imply global regulation,” he cautioned.
Japan is already a crypto leader, but with China’s domestic party effectively over, the country of the rising sun could see even more growth in the months and years ahead. The country has been battling the specters of a devastating recession, one that took more than a decade to work its way through their economy not long ago. Analysts believe that Japan cannot afford to ban innovative technologies, much less become entangled in excessive global regulations. There’s also the fact that Japan has a long history with cryptocurrencies like bitcoin, having weathered its biggest scandal, Mt. Gox, without overreacting. Perhaps it’s best if they remain the outlier, the crypto mineshaft’s canary.
Furthermore, Mr. Yamaoka emphasized, “So far, I don’t believe there are any major issues.” “However, we must proceed with caution. If the exposures turn out to be significant, we may need to follow up and work with the Financial Services Agency to maintain financial stability.”
For the time being, he believes cryptocurrencies aren’t a significant threat because bitcoin isn’t used in many transactions in comparison to the overall economy. For the time being, the fact that they are not a disruptive payment or settlement force has allowed Japanese regulators to take a wait-and-see approach.