It’s not the sexiest headline in the world, but so far things with bitcoin seem to be going relatively well in Japan, according to a Bank of Japan (BOJ) Director-General. With increasing calls from world leaders to unite and devise a global regulatory regime for cryptocurrencies, Japan has taken a strikingly different approach.
Director-General of payment and settlements of the Bank of Japan, Hiromi Yamaoka, explained, “There’s undoubtedly growing interest among global policymakers on how to deal with cryptocurrencies. Japan’s approach would be to think about how to curb excesses without discouraging innovation,” Yamaoka told Reuters.
Indeed, the near seven thousand island nation has been a definitive point of success for cryptocurrencies, and especially bitcoin, which are recognized as legal in the country. The third largest world economy is a fine experiment in a sea of countries which still struggle as to what to make of decentralized currencies.
Ironically bitcoin’s price rise has only hastened concern among regulators. Pretty much weekly, if not daily, there are calls from one corner or another of the globe to severely restrict if not outright ban digital assets. For Japan, the watchword seems to be caution, but erring on the side of allowing these new forms of money to first flourish. And Japan is doing this in an increasing air of fellow first world countries looking for global regulation.
The Director-General continued: “It’s uncertain whether global cooperation would mean global regulation. It may mean sharing a common view on the risks involved in cryptocurrency trading and seeking to send out a common message. Global harmonisation may not necessarily mean global regulation,” he noted.
Japan is already a crypto leader, but with China effectively ending their domestic party, the land of the rising sun could see an even greater boost in the months and years to come. The country has been battling the ghosts of a back-breaking recession, one that not so long ago took over a decade to work its way through their economy. Analysts get the sense that innovative technologies are not something Japan can afford to ban, much less entangle in excessive global regulations. There is also the fact that Japan has relatively long experience with the likes of bitcoin, and powered through its greatest scandal, Mt. Gox, without overreacting. Maybe it’s better they continue to be the outlier, the canary in the crypto mineshaft.
In addition, “so far, I don’t think there are any big problems,” Mr. Yamaoka stressed. “But we need to look carefully. If the exposures turn out to be huge, we may need to follow up and work to maintain financial stability together with the Financial Services Agency.”
For now, he suggested cryptocurrencies pose little threat, as bitcoin isn’t used in many transactions relative to the overall economy. Their not being a disruptive payment or settlement force, for now, has allowed Japanese regulators to take a wait and see approach.