While most countries are tolerant of bitcoin and other digital currencies, not many recognize it as a means of payment, or actual currency, from a legal standpoint. According to recent reports, Bitcoin has just managed to get the recognition associated with mainstream currencies just like fiat, over in Japan, thanks to a recently-implemented law that categorizes bitcoin as a legal payment option.
The law, which has come into effect on the 1st of April, has both advantages and disadvantages. With this in mind, bitcoin exchanges operating in the Nippon country will face regulatory scrutiny, and the application of all laws that currently govern financial institutions and banks in Japan. Based on this aspect, all exchanges operating inside the country will need to comply with the already-strict anti-money laundering regulations, alongside with the Know Your Customers (KYC) laws. This will mean that bitcoin exchange users will face less privacy, as annual audits will be conducted as well. Luckily, numerous cyber security requirements have also been implemented, therefore further securing the private data of exchange users, alongside with their funds. This is great news considering the fact that one of the world’s biggest exchange hacks (The Mt. Gox event) took place in Japan a few years ago.
At this moment in time, it seems like bitcoin exchanges in Japan aren’t fully ready to comply with the new regulation. To help in this regard, an institution known by the name of the Accounting Standards Board of Japan has recently announced that they will be creating an accounting framework that can be used by both businesses and users that are dealing with the digital currency, to make AML and KYC requirements easier to fulfil. This may give individuals and businesses a bit more work to do, though, so it comes with a downside as well. Regardless of this aspect, it will surely take a while before bitcoin exchanges, alongside with individuals and companies that use bitcoin will get used to the new practices and regulations, and accurately report what is required of them.
Economic analysts have carried out studies which determined that these developments are likely to drive the use of the digital currency in Japan to around $9 billion in the following three years, until 2020. This value is 5 times higher when compared to the $1.7 billion traded in the country, back in 2015.
Based on everything that has been outlined so far, what do you personally think about Japan recognizing bitcoin as an actual currency, and the new laws surrounding its use, which are bound to affect both exchanges, individuals and companies? Let us know your thoughts in the comment section below.