Japan considers regulating Bitcoin as currency

Japanese regulators have proposed that electronic money, such as Bitcoin, be accepted as a form of payment, a feature that would give it the same legal status as traditional currencies in Japan.

Japan’s Financial Services Agency (FSA) is considering whether to amend legislation to allow electronic money to “fulfill the functions of currency,” Nikkei reported.

“Bitcoin is still viewed as a commodity, but not in the same way as its more established counterparts,” the report said, adding:

“According to the definition proposed by the FSA, a virtual currency must be used as a medium of exchange, which means that it can be used to purchase goods and services. In addition, bitcoin must be exchangeable for legal tender when making a purchase or transaction with an unspecified partner.

As a result of the change , financial institutions will need to register with the FSA, a policy monitor believes the registration could help prevent a repeat of the collapse of Japanese bitcoin exchange Mt. Gox in 2014, which left millions of consumers with lost funds.

The news comes amid a conversation about how Japan will regulate cryptocurrency exchanges in terms of know-your-customer (KYC) and anti-money laundering (AML) regulations.

Nikkei added that the proposed changes are expected to be submitted to a meeting of the Diet, Japan's legislature, from January 4 to June 1, and any changes will be approved before the end of the meeting.

In addition to the article, the FSA told CoinDesk, a bitcoin news resource, that “nothing has been finalized and no official action has been taken on digital currencies.”