Cryptocurrency Regulations On Global Scale May Be Hard To Impose, Says Bank of Japan Official

News, Regulation | January 26, 2018 By:

Hiromi Yamaoka, head of the Japanese central bank’s division on payment and settlement systems, said that imposing global, across-the-board regulations on cryptocurrency trading will not be easy.

In an interview with Reuters, Yamaoka said that unlike South Korea and China, Japan wants to ensure any rules that it adopts won’t hinder innovation.

“There’s undoubtedly growing interest among global policymakers on how to deal with cryptocurrencies,” Yamaoka said. “Japan’s approach would be to think about how to curb excesses without discouraging innovation.”

Japan, South Korea, and China are the world’s largest trading market for cryptocurrencies. Japan is the only one of the three countries which has decided to recognize bitcoin as a legal method of payment. South Korea is prohibiting local cryptocurrency exchanges from allowing users to make transactions through anonymous accounts, while China has effectively shuttered bitcoin exchanges and banned all initial coin offerings (ICO).

Yamaoka said it will be hard to define which cryptocurrency needs to be regulated and for countries to agree on a uniform set of rules, given it isn’t easy to come up with common regulations even for traditional banking services.

“It’s uncertain whether global cooperation would mean global regulation,” he said. “It may mean sharing a common view on the risks involved in cryptocurrency trading and seeking to send out a common message. Global harmonization may not necessarily mean global regulation.”

Recently, Goldman Sachs’s investment management arm said that bitcoin’s astronomical rise over the past year “has moved beyond bubble levels in financial markets, ‎and even beyond the levels seen during the Dutch ‘tulip mania’ between 1634 and early ‎‎1637.”

Yamaoka said it was hard to say whether bitcoin was experiencing a bubble because cryptocurrencies have no underlying assets to measure their real value.