As cryptocurrencies grow in popularity around the world, a number of governments are showing interest in them. There seems to be a global race to become the leading country in the development and adoption of cryptocurrencies.
As more governments seek to have a stake in the crypto industry, Japan’s government is reportedly looking to set up an international network for cryptocurrency payments. The system being developed by Japan will work in a similar fashion as the SWIFT network that is used by banks internationally. The network Japan is working on is designed for the purpose of fighting against money laundering and financial crime in the crypto industry.
Reports from sources close to the developments say that the system is likely to be launched within a few years. Japan is hoping to develop the system in cooperation with other countries and a team that has relations to the intergovernmental Financial Action Task Force (FATF) will oversee the process.
Inner Workings Of The System
There is no sufficient clarity regarding how exactly the system will work. SWIFT makes use of a messaging system to facilitate international payments and there is a likelihood that the cryptocurrency network may employ similar methods. The plans to put the network in place were approved by the FATF in June. Japan’s Ministry of Finance and the Financial Services Agency (FSA) worked together to develop and put forward the proposal.
The Security of Cryptocurrencies
One of the biggest obstacles in the widespread adoption of cryptocurrency has been the issues surrounding their security. Japan is making active efforts to develop a system that will provide digital assets with the security they need. If the security is provided by the network, online crypto trading would receive a much needed boost.
While the network will provide security, its adoption by users is another matter altogether. Crypto traders, one some level, are attracted to digital assets because of their unregulated nature. Introducing a system that regulated cryptocurrency networks worldwide may not be welcomed by traders in the crypto world. Governments and bankers need cryptocurrencies to be regulated for security reasons. It will take the network being launched to see whether it will be received in the crypto world.
Japan was the first count to regulate cryptocurrency exchanges in the world. Regulations were applied at the national level and digital crypto exchanges have been in business in the country since then.
Cryptocurrencies And Their Future
Cryptocurrencies have become the subject of conversation in the news and on social media over the last few weeks. Facebook’s announcement of its project Libra has governments, regulators and players in the crypto industry talking. The main issues being raised in these conversations are with regards to anti money laundering, data privacy and security of crypto transactions.
Without doubt, cryptocurrencies have secured their place in the future of fintech. The only question is how exactly regulators will go about implementing the necessary regulations and if users will accept these regulations. Governments getting involved in the crypto industry is a good sign for the industry and an indication of how far cryptocurrencies have come.