Hiromi Yamaoka, head of Bank of Japan’s (BOJ) payment and settlement system division, said imposing global regulations on cryptocurrencies won’t be easy.
“It’s uncertain whether global cooperation would mean global regulation,” Yamaoka said before further adding:
“It may mean sharing a common view on the risks involved in cryptocurrency trading and seeking to send out a common message, but global harmonization may not necessarily mean global regulation.”
Even traditional banking services do not have common regulations, he said after wondering which cryptocurrency do you regulate.
Taking the top two, ethereum and bitcoin, they are similar in an abstract way, like Facebook and Amazon are internet websites, but vastly different in concrete ways.
Ethereum is Turing complete, while bitcoin isn’t, to give just one example. The differences are far greater when we consider tokens. Some act like stocks, some like reward tokens, some like stable currencies, some are decentralized cooperatives.
They might all fit under the umbrella of crypto, like airplanes and bicycles fit under the umbrella of transport, but they also act very differently too.
More importantly perhaps, Yamaoka said it is hard to say whether cryptos were experiencing a bubble as they have no underlying assets to measure their real value.
Thus seemingly responding to mainly commercial bankers who appear to see cryptocurrencies as a real competitor, Yamaoka said he doesn’t see any problem:
“So far, I don’t think there are any big problems. But we need to look carefully. If the exposures turn out to be huge, we may need to follow up and work to maintain financial stability together with the Financial Services Agency.”
The idea is, of course, to incrementally improve the commercial free market system, keeping the old while bringing in the new technology, so gradually upgrading the system to the 21st century, gaining higher efficiency and productivity in the process.
But there has been increasing debate recently on how to regulate digital currencies. Some unfree countries, like China, have banned crypto all-together. South Korea was considering it too, but they have seemingly settled on just taxing it.
“There’s undoubtedly growing interest among global policymakers on how to deal with cryptocurrencies,” Yamaoka, whose division also oversees cryptocurrencies, said. “Japan’s approach would be to think about how to curb excesses without discouraging innovation.”
So far, Japan has been the most crypto friendly country in Asia, and in some aspects in the entire world. They are the first nation, and remain the only one, to declared crypto as legal tender.
They saw an increased share of activity after China banned exchanges, with Tokyo so benefiting after it signaled blockchain companies were very much welcomed.
As such, Japan might be going through a once in a life time opportunity to set up itself as a hub in the region and in the world. With the island nation so potentially mirroring Britain in 2014 when Fintech businesses flocked after it declared itself open for business.
Japan’s strategic interests therefore, as far as this space is concerned, are vastly different when compared to France, Germany, America, or much of anywhere else.
So the crypto G20 summit, which is rumored to occur in March, April, or perhaps November, in an undecided location although some say Argentina, might be a defining and historic moment, when raw intellect will decide the fate of nations.
“It is not the strongest of the species that survives, nor the most intelligent that survives. It is the one that is most adaptable to change.” Darwin.