2017 has seen a monumental shift in Bitcoin volumes as Chinese exchanges have banned withdrawals for their customers. Due to this, trailing countries in terms of Bitcoin volumes have stepped up to restore and maintain the price levels of the Bitcoin ecosystem. This was facilitated due to the increase in adoption levels and the kind of encouraging regulations that were put in place to promote digital currencies. Topping the list of countries that are committed to this cause are Japan and South Korea. Recently Japan has passed a bill to officially recognize Bitcoin and cryptocurrencies as a method of payment on par with fiat currencies. This can be heralded as a very important instance where Bitcoin has seen the light of mainstream adoption. Let’s look into the details of the bill and what might be the further implications.
How Bitcoin became a method of payment
In February 2016, Japan’s Financial Services Agency (FSA) which is the country’s financial regulator, looked into proposals to recognize bitcoin and digital currencies as equivalents to conventional currencies. This means, if approved, the revisions imply that Bitcoin would be getting the status of fiat currencies. In March, the Japanese cabinet passed a set of bills that deemed virtual currencies to have asset-like value. Owing to their transferable nature, they can be used to make payments like gold.
The accounting problem
While cryptocurrencies are legalized and would be effective as payment methods starting from April, there is a catch here for Bitcoin businesses and transactions. The Japanese Government has not come up with a regulatory or accounting framework to monitor the transactions. The set date for proposing and finalizing an accounting framework is due in six months leaving cryptocurrency businesses in a limbo as any further movement on their part might turn out to be adverse for their business.
What this would mean for Japan and for Bitcoin
Japan has already moved into the Top 4 countries list of cryptocurrency exhanged and bought by volume. The Japanese government has made the first move towards mainstream adoption of cryptocurrencies when they abolished the 8% sales tax on Bitcoin purchases. With this move, things look positive for Bitcoin proponents as the adoption has already paced up in Japan to catalyze the growth of the cryptocurrency and set up a foundation for other countries to build their regulation on.