While Facebook attempts to launch their own cryptocurrency and battles the US government trying to approve the decision, Japan is completely changing the game. According to the latest report from Reuters, the country is developing an international network for cryptocurrency payments using SWIFT as a template.
Japan Solves the Largest Crypto Problem
The main issue major financial regulators have with crypto is the lack of transparency. For example, here’s a statement by the U.S. Treasury Secretary Steven Mnuchin:
"Cryptocurrencies such as bitcoin have been exploited to support billions of dollars of illicit activity like cyber crime, tax evasion, extortion, ransomware, illicit drugs, and human trafficking."
He added that Facebook’s Libra “could be misused by money launderers and terrorist financiers.”
Japanese solution is intended to solve this issue, providing a clear and reliable way to make payments with cryptocurrency. The Financial Action Task Force (FATF) is said to have approved the Japanese plans in June. The network was originally proposed by Japan’s Ministry of Finance and the Financial Services Agency (FSA). It is set to launch within five years.
Swiftly Disrupting Legacy Payments Networks
SWIFT is a network for the financial institutions to send and receive information on financial transactions. It was founded in 1973 and since then it is the only major player in the interbank communications, serving over 32 million messages per day. However, it only works with fiat.
The new Japanese solution aims to take the internal structure of SWIFT and adapt it to crypto, which should provide some long-needed legality to the market. Of course, it will go against the ideal of cryptocurrency freedom, but it will also prevent issues like Mt. Gox being notoriously hacked in February 2014 and losing billions of USD that belonged to its customers.
Japan is not alone in its ambitions — Facebook’s Libra has been challenging the FSA since the beginning of the year and will be a hot topic during the G7 meeting in France. It is up to the finance ministers to discuss how their countries are going to move forward, but so far neither the US nor Japan are willing to back down.
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