Although cryptocurrencies have features that can allow it to serve as money, Japan's Financial Services Agency (FSA) does not consider it be a legal tender yet and moved to separate the old and new form of money.
A local news agency, The Japan News, reported the move by the regulators and stated the reason behind the decision is that they want to make traders stop believing that buying cryptocurrency is the same as buying a government recognized ‘legal tender’ like the fiat currency.
An advisory panel appointed by the FSA last week to look into the matter stated that the use of the term “virtual currency” in legal frameworks could cause a misunderstanding.
To prevent such confusion, the FSA purportedly agreed to replace the term “virtual currencies” with “crypto-assets” in their future regulatory frameworks for the emerging industry.
Revised editions of the country's Payment Services Bill (PSB) will also include the new resolution according to the report.
Where Japan Got Crypto-Asset Definition From
The Japanese regulators have drawn the new definition from the G20 Member Countries meeting held in March where Bitcoin and other cryptocurrencies were defined in a draft statement as “crypto-assets” rather than “virtual currencies.”
Finance Ministers and Central Bank Governors who attended the meeting concluded that Bitcoin and co. “lack the key attributes of sovereign currencies,” although they are qualified to exist as assets, hence the term “crypto-assets.”
So, it comes as a little surprise that Japan as a G20 member nation has chosen to stick with the group’s directive.
In a more recent meeting, G20 member nations also agreed to create a global taxation system for cryptocurrencies and align the invention with existing Financial Action Task Force (FATF) standards.
Japan's National Tax Agency (NTA) has similary said that it will adjust existing regulations with the goal of reducing crypto tax evasion in the country.