A Reuters report today confirmed that the Japanese government is leading the development of a SWIFT-like network that will handle cryptocurrency payments.
Citing an anonymous source with knowledge of the matter, the report noted that the said network is an idea developed by the Japanese Finance Ministry and the country’s Financial Services Agency.
The local regulators obtained approval from the Financial Action Task Force (FATF) before embarking on the project, and will also be monitored closely by the standard-setting body until it goes live in the next few years.
Also, although Japan is spearheading the project, several other unnamed countries are involved since the primary purpose of the network is to solve the money laundering concerns posed by the emergence of cryptocurrencies.
Apparently, Japan is using its status as one of the first countries to bring cryptocurrency exchanges under anti-money laundering and counter-terrorism financing (AML/CFT) to create the global crypto payments network.
What remains unclear at this point, however, is how the system will work.
Stmarket.co reported last month that new FATF regulations for cryptocurrency platforms would require the creation of a global network that would allow these firms to share user data seamlessly.
Given that SWIFT itself is an international payment messaging system used by banks to send money around the world, Japan's proposed network would likely fill in this role for cryptocurrency exchanges.
Meanwhile, the latest development means we now have two entities working to create a system that would allow cryptocurrency platforms to tackle AML/CFT concerns in line with the FATF rules.