Senior Bank of Japan Official Says G7 Must Accelerate Creation of Crypto Regulatory Framework

Kazushige Kamiyama, the head of the Bank Of Japan’s (BOJ) payment and settlement systems department, has appealed to the G7 policymakers to ramp up the creation of a common framework to regulate digital currencies.

According to reports, Kamiyama has asked the policymakers of the Group of Seven advanced economies, to put a spurt on forming a legal framework in order to have a common understanding on how to regulate the crypto market. He said that as the Russia-Ukraine war escalates, the need to regulate cryptocurrencies has become a matter of grave importance as virtual tokens can be used to circumvent sanctions. 

Crypto Can Be Used To Circumvent Sanctions

He emphasized that crypto assets and stablecoins have come under the regulatory spotlight amid concerns they could be used to evade financial sanctions imposed on Russia since its invasion of Ukraine. Kamiyama remarked,

“Such digital currencies could upend the global settlement system as they make it easier to circumvent conventional payment means using the Dollar, Euro and Yen. By using stablecoins, it’s not very difficult to create an individual global settlement system.”

The senior BOJ official, said that regulating crypto assets and stablecoins isn’t easy, as holders can transfer funds across borders far more easily than through legal tender. The need to balance privacy and money-laundering concerns will also affect debate on the design of a digital currency.

The central bank will begin its second phase of experiments from April, which will test some features such as whether to set a limit on the sum each entity can hold. However, BOJ Governor Haruhiko Kuroda has said a decision on whether to issue CBDC may come only by 2026. Kamiyama highlighted that with so many advance economies around the world working on CBDCs, Japan needs to make sure it’s not left behind. He concluded by saying,

“Given how so many advanced nation central banks are moving collectively, dramatically and simultaneously on CBDC, it could cause big changes in the settlement system in the future.”

Japan To Have Its Own Digital Yen

In 2020, The Bank of Japan moved Kazushige Kamiyama, the most senior economist to lead the department responsible for research and development into central bank digital currencies (CBDCs). Later in the same year, the central bank of Japan announced the launch of its own central bank digital currency (CBDC). The announcement said,

“The Bank decided that it would publish its approach to “general purpose” CBDC — that is, CBDC intended for a wide range of end users, including individuals and firms.