Japan Rejects Bitcoin as a Foreign Reserve Asset, Citing Volatility

• Japan’s Prime Minister Shigeru Ishiba has expressed doubts about adding Bitcoin to the country’s foreign exchange reserves, following a proposal from Satoshi Hamada to establish a national Bitcoin reserve inspired by the United States.
• The government is concerned that incorporating Bitcoin could destabilize its financial system, leading to its previous rejection of Bitcoin-based ETFs due to the associated risks related to crypto products.

Japan has officially rejected Bitcoin as a reserve asset. The decision, made by Japan’s prime minister Shigeru Ishiba, highlights the ongoing debate surrounding the legitimacy and stability of cryptocurrencies in traditional financial systems. As we reported earlier, Satoshi Hamada, a Japanese lawmaker, made a proposal requesting the government to establish a national Bitcoin reserve. He also highlighted similar development projects in nations like Brazil and the United States, indicating a worldwide change in opinions and use of cryptocurrency.

Prime Minister Ishiba Shigeru expressed concerns about Bitcoin’s volatility, warning that its price fluctuations could jeopardize Japan’s economic stability. He highlighted that the unpredictable nature of Bitcoin makes it unsuitable as a reliable reserve asset, prompting Japan to refrain from incorporating it into its national financial system. The Prime Minister stressed that Japan’s foreign exchange reserves aim to maintain stability, focusing on more predictable financial assets like bonds and foreign currencies.

Japan’s national adoption of Bitcoin could stimulate creativity in blockchain technology within the country, aligning with its broader cryptocurrency policies and encouraging technological development. To promote innovation, Japan plans to reduce regulations for non-exchange crypto intermediaries, such as gaming applications and self-hosted wallets. These new guidelines aim to ease compliance for these entities while maintaining a balance between investor protection and the advancement of blockchain technology.

The Race for Bitcoin: U.S., Brazil, and Russia

Metaplanet, a Japanese investment firm, recently boosted its Bitcoin holdings by acquiring an additional 617 BTC. This substantial investment demonstrates Metaplanet’s positive outlook on Bitcoin and highlights the growing interest in cryptocurrency from Japan’s private sector.

In the United States, Senator Cynthia Lummis has advocated for the creation of a strategic Bitcoin reserve, believing it would enhance the durability of the dollar and reinforce national leadership in the cryptocurrency sector. However, Federal Reserve Chairman Jerome Powell has noted that the Fed is unable to hold Bitcoin. This ongoing discussion could potentially impact Bitcoin’s market price, which has already shown significant volatility influenced by investor sentiment.

Brazil is also pursuing similar initiatives, with legislators pushing for the inclusion of Bitcoin in their national reserves. These examples reflect a global trend where various countries are diversifying their financial strategies to incorporate decentralized digital assets. Concurrently, former Thailand Prime Minister Thaksin Shinawatra has proposed a plan to integrate Bitcoin into Phuket’s tourism economy.

In the meantime, Russia is making news with its latest moves in cryptocurrency regulation. Beginning in January 2025, the nation will enforce a six-year ban on crypto mining across ten regions to tackle power shortages and avert outages during times of high electricity demand. Additionally, Finance Minister Anton Siluanov has announced that Russia has officially started using Bitcoin for international payments. This adoption of Bitcoin highlights the country’s broader strategy aimed at reducing its reliance on the dollar.