Liberal-Democratic Party of Japan Proposes a Move Toward State-Issued Digital Currency

According to the Nikkei Shimbun, the ruling Liberal-Democratic Party of Japan (LDP) has adopted a policy of gathering recommendations in the spring toward state-issued digital currency from the perspective of protecting personal information and combating money laundering.

 

The Bank of Japan announced on January 20 that it had established a group for joint research into the issuance of central bank digital currency (CBDC) from major central banks. Amidst this trend, there has been the threat of China going ahead with its own national digital currency, and it appears that the LDP has been preparing its own legislation to anticipate this movement in the future.

 

According to Nikkei’s report, “what drew the LDP’s interest (in digital currency) was the protection of personal data.” Digital currency is anticipated to be distributed with ties to information such as who owns how much from when, and carries the risk of infringing on personal privacy.

 

In addition, there is a need for measures to combat money laundering. Digital currency makes it possible for the risk of exposure to cyberattacks to increase, as well as the theft of large amounts of currency and the creation of counterfeit currency. The Japanese government’s measures are “closely linked to the Act on the Protection of Personal Information and criminal law,” and it seems that the LDP is moving forward with preparing new legislation. It has been stated that the LDP “expects development support and training by startup companies and other entities for blockchain technology to be incorporated” into proposals for state-issued digital currency.

 

In Japan, margin trading for cryptocurrency is expected to be changed to a maximum of 2x after April. The Financial Services Agency will designate this policy through a Cabinet Office order for the revised Financial Instruments and Exchange Act to be implemented in spring 2020. A self-regulation organization for cryptocurrency exchanges within Japan had been working on this front, and the leverage rate had already started being lowered from last year, but there are many exchanges that have the margin limit set at 4x at present.

 

How the cryptocurrency market in Japan will remain active as legal developments proceed after this spring will become a topic of discussion.

 

*This article was written by FISCO.