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Japanese government to create a network similar to SWIFT, for international cryptocurrency payments. The Ministry of Finance and the Financial Services Agency will deploy this network to also tackle financial crimes.
Japan is seen by most as one of the most crypto-friendly environments in the world and its government seems to be keen on keeping this position. The Japanese government is now grabbing the crypto bull by its horns as it intends to create an international network for cryptocurrency payments, comparable to the SWIFT network currently used by banks.
Apart from breaking new grounds with cryptocurrency, the government also intends to use this in its fight against money laundering and other financial crimes.
According to reports, the network was proposed by Japan’s Ministry of Finance and the Financial Services Agency (FSA) and its development has already been approved by the inter-governmental Financial Action Task Force (FATF) which will have a related team to monitor its creation and development, with support from other countries.
At the moment, there is little to no information about how the network is intended to operate and there is not yet an official state from the Ministry of Finance or the FSA. Regardless, the payment system is expected to be ready and deployed sometime with the next few years.
It might also be important to consider whether or not there’d be any opposition to the network from the country’s budding cryptosphere. This is because there will now be a more oversight function in the sector, which in some ways, goes against the fundamental nature of the crypto industry – its deregulation. However, it’s not difficult to see why the sector’s unregulated landscape is a serious problem for many traditional institutions and governments all over the world.
Japan’s desire for regulation in the sector is not misplaced especially when it is considered that some crypto exchanges in the country have been affected by a few breaches in the past. Coincheck and Mt. Gox, both Japanese platforms, were seriously damaged by hackers and up till now, both platforms are still referenced as part of the reasons why comprehensive regulatory action is needed in the sector, all over the world.
As a response to the unending risk from cybercriminals, the country is constantly developing ways to prevent such occurrences or at least reduce the risk. This is one of the reasons why Japanese lawmakers eventually passed a law that allowed Bitcoin to be recognized as legal tender, back in 2017.
This need for regulation is also the major reason Facebook is getting a lot of flak from the U.S. government since it announced its own digital asset, the Libra. Lawmakers recently grilled Facebook executive and head of the Libra/Calibra project, David Marcus, on the plans for the cryptocurrency for more than five hours.
This came after members of the government in different areas called for a suspension of the project until some of the issues regarding privacy are resolved. This call for a suspension was also repeated at the congressional hearing, with Marcus promising that all issues will be properly addressed before the Libra officially launches in 2020.