Regulators in Japan have reportedly proposed treating digital currencies like bitcoin as methods of payment, a distinction that would make them legally equivalent to conventional currencies in the country.
According to a report by Nikkei, Japan’s Financial Services Agency (FSA) is considering whether to make revisions to legislation that would classify digital currencies as “fulfilling the functions of currency”.
“They are now recognized as objects but are not treated on a par with their more established counterparts,” the report states, adding:
“Under the FSA’s proposed definition, virtual currencies must serve as a medium of exchange, meaning that they can be used to purchase goods and services. They must also be exchangeable for legal tender through purchases or trades with an unspecified partner.”
As a result of the change, financial institutions would need to register with the FSA, a policy regulators believe could help prevent a scenario similar to the collapse of Japan-based bitcoin exchange Mt Gox, which lost millions in consumer funds to insolvency in 2014.The news comes amid a broader conversation ongoing in Japan over how digital currency exchanges should be regulated under know-your-customer (KYC) and anti-money laundering (AML) statutes.
Nikkei adds that the proposed changes are expected to be submitted during the current legislative session of the Diet, Japan’s legislature, which runs from 4th January to 1st June, with any changes being approved before the session concludes.
Despite the article, the FSA told CoinDesk that “nothing has been decided yet” and that it has yet to take any official action on the treatment of digital currency.