Cryptocurrency is legal tender in Japan. There is active regulation in the country which makes Bitcoin and altcoins perfectly legal. That situation has been rather interesting to keep an eye on, as the law is still subject to interpretation. As of right now, the Japanese FSA aims to have cryptocurrency exchanges drop all cryptos which can be considered facilitators of criminal activity.
What is Happening in Japan?
There has been growing scrutiny of cryptocurrencies which focus on privacy and anonymity, as well as those which could enable criminal activity. Although it is a bit unclear which currencies should be looked into in this regard, it seems any currency with privacy traits is considered to be a liability. This does not bode well for currencies such as Monero, Zcash, Dash, Verge, and a few others.
Japan’s Financial Services Authority has been paying a lot of attention to those currencies which may potentially be used by criminals. For a lot of people, Bitcoin would fall into this category, although it appears the FSA is not too bothered by the world’s leading cryptocurrency. Instead, the agency wants to tackle the ‘anonymity currencies’ and have them removed from domestic exchanges.
This rather harsh course of action raises a lot of questions, for obvious reasons. There is very little proof that currencies such as Monero and Dash are used by criminals, even though it would make a lot of sense if that were the case. Monero is often used in nefarious schemes such as malicious in-browser cryptocurrency mining. Whether or not that warrants a national crackdown on this currency is a different matter altogether.
Although it remains to be seen if Japanese exchanges will remove these currencies, a very peculiar tone has been set. One can see why the FSA is concerned with further connections between cryptocurrency and criminal activity, although it is very difficult to pin that label on just the currencies which provide anonymity or privacy features.
One thing not working in favor of currencies such as Monero is that they obfuscate all trading activity at all times. It is virtually impossible to identify senders, recipients, and transaction amounts in real time. This makes them a thorn in the side of a lot of regulators, although cracking down on such activity will always be a big challenge. Even if exchanges were to remove support for these currencies, users would simply switch to OTC trading.
It seems Monero is bearing the brunt of this scrutiny right now, mainly because it is the only private and anonymous cryptocurrency on the market today. Coincheck has also removed this currency, as well as Zcash and Dash, from its platform following its hack in early 2018. It is certainly possible that other trading firms will follow its lead.