Japan officially recognises Bitcoin as currency

Japan officially recognized bitcoin and digital currencies as legal money with effect from 1 April 2017.

The recognition comes after implementation of a new law amending Banking Act in Japan for legalizing these currencies. The step will facilitate integration of digital currency into legal banking system through regulatory scrutiny.

Key highlights

• The law proposes setting financial conditions that virtual currency exchange operators should meet, such as a certain amount of capital, and requiring them to manage customer assets separately from their own corporate assets.

• It calls for introducing a mandatory system for exchange operators to undergo external checks by certified public accountants or auditing firms for their asset management conditions and financial statements.

• The recognition of cryptocurrency as a legal tender also means the applicability of regulations governing banks and financial institutions to cryptocurrency exchange platforms.

• The bank and institutions will be required to comply with strict anti-money laundering (AML) and Know Your Customer (KYC) requirements.

• Adoption of cryptocurrency is expected to increase among people, which will, in turn, drive demand and price.

What is bitcoin?

• Bitcoin is a cryptocurrency and an electronic payment system.

• It was invented by an unidentified programmer, or group of programmers, under the name of Satoshi Nakamoto.

• It was introduced on 31 October 2008 to a cryptography mailing list, and released as open-source software in 2009.

• The system is peer-to-peer, and transactions take place between users directly, without an intermediary. These transactions are verified by network nodes and recorded in a public distributed ledger called the blockchain, which uses bitcoin as its unit of account.

• As of February 2015, over 100000 merchants and vendors accept bitcoin as payment.