Japan’s financial services regulator reportedly no longer wants to describe Bitcoin Core (BTC) as a virtual currency, with a senior academic labelling the description as not “worthwhile.”
According to reports, the Financial Services Agency (FSA) said that the BTC token could not be accurately defined as a virtual currency, because of its use in borderless transactions worldwide.
BTC has become ineffective for payments, due to slow processing times and high transaction fees, relative to other Bitcoin payment solutions, such as Bitcoin SV. The position of the Financial Services Agency is another indicator that BTC no longer fits the needs of virtual currency users.
As BTC continues to lose out to vastly superior alternatives like Bitcoin SV, an FSA representative said understanding the token as a virtual currency no longer felt relevant or appropriate.
The comments were made by Professor Iwashita Goto, after he told the 41st General Assembly of the Financial Council and the 29th Financial Division Meeting that BTC was not virtual currency.
He noted, “I don’t think it would be worthwhile to call [BTC] a virtual currency.”
The professor was petitioning the authority to adopt his revised understanding of BTC as a distinct asset in its own right. This supports the case for BTC-specific regulation, rather than considering it alongside other virtual currencies.
The move is the latest development in Japan’s evolving regulatory system for the crypto sector. With regulation focusing on encouraging innovation and providing the legal certainty operators demand, Japan is being seen as a model for how other jurisdictions might regulate their crypto industries.
The FSA led the development of the new licensing scheme for virtual currency operators, following a series of high-profile hacks at Japanese exchanges including Coincheck, which lost over $500 million in client funds during the attack.
The licensing scheme currently has a lengthy waiting list for applicants, and imposes a high compliance standard on those that hope to make the grade. The regulatory scheme has thus far proved successful, with Japanese trading firm Liquid recently being valued at over $1 billion for the first time.
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