Amid the growing craze for cryptocurrencies, financial watchdogs have shared their concerns about the lack of a well-structured regulatory framework for the industry. Ever since the launch of cryptocurrencies, governments have been skeptical about their involvement in illicit transactions. The latest news in this regard is coming from Japan where the central bank of the country ‘Bank of Japan’ has released a strict warning for G7 nations urging them to adopt a unified regulatory infrastructure for managing and controlling the crypto sphere.
As per the bank officials, there is an urgent need to chalk out a framework for regulating cryptocurrencies in a bid to avoid financial glitches. The present rules are incapable of tracking the involvement of digital assets in skirting economic sanctions. In the recent tussle between Russia and Ukraine, there has been a rise in discussions pertaining to cryptocurrency transactions. The regulators have raised concerns over the use of crypto tokens to skirt economic sanctions. There has been a rising demand for scrutinizing the role of virtual currencies in this regard as the world moves towards a more financially liberal yet complicated ecosystem.
The chief of the Bank of Japan’s payment systems unit, Kazushige Kamiyama stated that the use of stablecoins makes it convenient to draft an individual global payment settlement infrastructure. This allows countries to deceive the traditional and legal payment channels that use the U.S Dollar, Japanese Yen, or Euro for payment execution purposes. The spearhead added that a regulatory structure is very important for the G7 nations to manage cryptocurrencies and other virtual assets. The current regulations do not completely take into account these requirements related to their mainstream adoption and expansion across the globe.
The chief emphasized that the legal setup will lay a direct impact on the development of the country’s native CBDC project called the Digital Yen. It is essential to strike a balance between the privacy of investors and the potential risks of money laundering and white-collar misconduct. The governor of the central bank, Haruhiko Kuroda shared views on Digital Yen during the FIN/SUM fintech summit held on March 29, 2022. The chief revealed that the bank has no immediate plans to launch a CBDC as it wants to study its impact on the local people of the country.
The officials want to rest assured about the efficiency of the payment and settlement channels. The central bank has kickstarted round two of testing its Digital Yen project. The steps taken by the G7 nations, in the future, will have an impact on the process of the digital project. The country is likely to decide whether to roll out native crypto or not by 2026 depending upon the adoption rate of CBDC across the globe.
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