Bitcoin and digital currencies have been officially recognized by Japan as legal money, with effect from 1st of April 2017. The country has implemented a new law which amended the Banking Act in Japan, under which bitcoin and digital currencies are legal money.
The amended law is expected to help in the digital currency’s integration into the country’s legal banking system through governing scrutiny.
What is Bitcoin?
- Bitcoin is an electronic payment system and cryptocurrency, or in easy words it is a form of virtual currency, which is created and held electronically.
- No one controls this virtual currency. No bank or government regulated them, so they are not legal in most of the countries.
- They are not printed currency, like euros or dollars. They are created as a reward in an internet competition where users offer their computing power for verifying and recording bitcoin transactions into the blockchain.
- Bitcoin is called cryptocurrency because uses cryptography for preventing double-spending and is decentralized.
- It is a peer to peer distributed digital currency, which functions without the involvement of any banking or government authority.
- This virtual currency can be traded and its exchange rate varies much like a stock market.
Official Recognition of Bitcoin and digital currencies Means:
The recognition of digital currencies and crypto-currency as legal money means regulations governing financial institutions and banks in the country will be applicable to digital currencies and crypto-currency exchange platforms.
It is mandatory for them to comply with Know Your Customer (KYC) and strict Anti-Money Laundering (AML) requirements, beside with yearly audits. The new also mandates meeting the cyber security and stated capital requirements, in order to ensure protection of consumers.
The new law makes digital currencies can also be used for making payment in broader marketplace across the country and the currency can be sold or bought.