Japan officially recognises Bitcoin as currency

Apr 6, 2017 13:17 IST

BitcoinJapan 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.

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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.

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