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The Japanese government has officially announced its decision not to adopt Bitcoin (BTC) as part of its foreign exchange reserves. This response came as a reply to Senator Satoshi Hamada’s inquiries regarding Japan’s stance on holding Bitcoin, highlighting concerns about volatility and a lack of understanding of global cryptocurrency movements.
On December 20, the Japanese government issued a statement under the name of Prime Minister Ishiba Shigeru, addressing Senator Hamada’s proposal. The government clarified that it has no intention of incorporating Bitcoin into its foreign exchange reserves. The statement emphasized that discussions surrounding cryptocurrency reserves are still in their preliminary stages, making it “difficult to express a view” on the matter at this time.
Senator Hamada, a member of the Party to Protect the People from NHK, had urged the government to explore Bitcoin reserves, citing examples of other nations, including the United States, considering such measures. However, the government noted its limited knowledge about global movements in cryptocurrency adoption and expressed reservations about making such a significant shift in its monetary strategy.
The Japanese government also pointed to legal and regulatory barriers preventing the inclusion of Bitcoin in foreign exchange reserves. Under Japan’s legal framework for special account management, cryptocurrencies like BTC do not qualify as foreign exchange assets. Furthermore, the Financial Instruments and Exchange Act does not categorize crypto assets as securities.
The Payment Services Act defines “crypto assets” and requires all providers of crypto-asset exchange services (CAES) to register with the Financial Services Agency (FSA). Operating such services without proper registration can result in criminal penalties, according to Anderson Mori & Tomotsune, a prominent Japanese law firm.
Japan’s current foreign exchange reserves aim to stabilize currency-denominated assets and bond markets. The government emphasized that crypto assets, including Bitcoin, are too volatile to align with these goals. Instead, it prioritizes safety and liquidity to maintain financial stability.
The government’s decision not to adopt Bitcoin as part of its reserves reflects broader skepticism toward cryptocurrency integration in Japan’s financial framework. This stance could impact initiatives like the introduction of cryptocurrency exchange-traded funds (ETFs).
Akihiko Ogino, CEO of a leading Japanese investment bank, has suggested that Japan should explore crypto ETFs. However, Daiwa Securities, which manages the Nikkei 225 ETF, has yet to announce any plans for crypto-backed ETFs. The government’s cautious approach toward crypto assets may delay such developments.
Japan’s rejection of Bitcoin as part of its foreign exchange reserves underscores the government’s focus on stability and regulatory compliance. While other nations explore cryptocurrency reserves, Japan’s decision reflects its cautious stance toward the volatile and rapidly evolving crypto market. As discussions on crypto adoption progress globally, Japan may revisit its position in the future, but for now, it remains committed to traditional financial safeguards.
editor
A digital nomad exploring the limitless potential of decentralized finance in a centralized economy.