Short Report :Japan researching National Cryptocurrency Digital Yen

JAPAN RESEARCHING CRYPTO YEN

I read some interesting news articles and I have gleaned the following information from them. These are my summary thoughts, so they don’t reflect the views of the newsletter or authors. But I have cited the references for the News Stories to give appropriate credit to my sources.

The Bank of Japan has recently published a essay discussing the legalities of issuing a central bank digital currency (CBDC). The follows the news by China that it will launch its own digital currency electronic payment (DECP) sometime next year.
[Source}( https://bitcoinist.com/china-crypto-yuan-retail-payments-or-mass-surveillance/)

The Bank of Japan research team studied many legal issues, including a Big One: can the Bank of Japan issue cryptocurrency. They also discussed many hot topics like: transaction conditions, limitations of usage, currency issuance, and money laundering prevention.
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The research has been consucted over a long time period and started when the BoJ Institute for Financial Research created a Legal Issues Study Group on the CBDC in November 2018. Its main goal was to identify and study the main legal issues related to the launch of a digital currency in Japan.
Source

The essay reported that a CBDC would be two types of Tokens. An Account or Bank Token and a Cryptocurrency Token. The Account or Bank Token will be held by banks and backed by the BoJ, but available for individuals and businesses. The Cryptocurrency Token was called an ‘electronic banknotes’ according to the translation and data would be transferred between digital wallets in a similar manner to currency cryptocurrencies. The report stated that the Central Bank won’t dispense the Tokens, but instead they will be dispensed and dispursed by intermediaries due to concerns that having the Bank dispense the Tokens would effect the hierarchical structure of the financial system.
Source

NOTE: These are translations of difficult concepts, which don’t normally have words in the Japanese language, so these rules could change both due to translation errors or practicality.

OTHER IMPORTANT ISSUES DISCUSSED IN THE REPORT INCLUDE:
THE STATUS OF THE DIGITAL CURRENCY AS NON-TANGIBLE

The report specifically states that Central Bank Cryptocurrency would not be considered non-tangible, in contrast to regular Japanese currency, so the current law would need to be revised in order to grant any digital currency legal tender status.

The report continued to state that there would likely be restrictions on retail use to prevent money laundering or terrorism financing. Upper limits on transaction sizes are the most practical way of achieving this. Just with regular banks, there would need to be KYC regulations in place before any digital crypto goes public.
Source

An important point in this report was that in terms of personal privacy, there would be a lot of crypto transaction information stored on the blockchain, but it would not be utilized by the bank. Any information would be covered by existing Personal Information Protection Laws.

Editorial Note: The privacy provisions for the Chinese Cryptocurrency are expected to be the complete opposite.
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Finally, there was additional information in the report on rules and policies to prevent counterfeiting and the legal framework for possible currency seizures and the report concluded there are many legal issues to be still be addressed.
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✍️ By Shortsegments.

✍️ written by Shortsegments

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