Japan’s government responded on 20 December 2024, to a question posed by Senator Hamada Satoshi of the question whether Japan should maintain some Bitcoin in the form of its foreign exchange reserve.
This question came against the backdrop of increased public debates across the United States and other countries about considering including Bitcoin and other cryptos in national financial planning.
Senator Hamada, who represents the Party to Protect the People from NHK, proposed that Japan could adopt a similar approach as other countries, such as the U.S., by using part of its foreign reserves in cryptocurrencies like Bitcoin. According to him, this move will put Japan at an edge over other global economies as the digital asset market is rapidly changing.
However, the Japanese government was cautious in response. The government acknowledged that although there is a discussion about Bitcoin reserves overseas, it is not clear what the idea of such reserves entails, as per a statement by Prime Minister Ishiba Shigeru. The government further clarified that the discussions on this are still in the infancy stages and hence not much can be said at present.
The answer also stated that the foreign exchange reserves of Japan are meant to stabilize foreign currency markets and maintain the liquidity of foreign-denominated assets. Under present regulations, a cryptocurrency like Bitcoin is not considered a foreign exchange asset.
The government also stated the volatility of digital currencies as a reason why it could not be included in the reserve holdings of Japan as stability and liquidity were to be ensured.
Prime Minister Ishiba’s reaction exemplifies Japan’s risk-averse attitude towards accepting cryptocurrencies within its financial structure. The stance is consistent with similar conservatism observed in other nations such as the United States. Just recently, Federal Reserve Chairman Jerome Powell has publicly announced that the Federal Reserve can’t hold Bitcoin.
Also Read: Bitcoin Reserve Could Slash U.S. Debt by $42 Trillion: VanEck
