Japan is cautious about Bitcoin in national reserves due to volatility. It prioritizes stability and security in foreign exchange reserves.
The Japanese government has expressed caution about holding Bitcoin in its national reserves. Cryptocurrencies such as Bitcoin are not considered foreign exchange. Foreign exchange reserves must be liquid and secure, the government must ensure. The Bitcoin price is a volatile one and could cause problems for the reserve system.
In response to a question by Senator Satoshi Hamada on December 20, the government issued a response. He asked whether countries such as Japan should take a leaf from the books of countries, like the United States and include Bitcoin in their foreign exchange reserves. The response was published under Prime Minister Shigeru Ishiba’s name.
It is not clear that the government fully understands what other countries are doing with any Bitcoin reserves, the government added. Instead, it said discussions about Bitcoin reserves are still in the early stages in many places.
Japan Prioritizes Stability Over Bitcoin in Foreign Reserves
Under current laws, cryptocurrencies did not qualify as foreign exchange, the government explained. They are supposed to put the markets and assets in foreign currencies on a stable footing. These reserves are secured through the strict insistence of the government on their safety and liquidity.
Prime Minister Ishiba’s response shows that Japan is taking a careful approach. It quickly becomes apparent, however, that Bitcoin’s extreme volatility would be contradictory to the goals of a reserve system run by a government. Japan has not yet decided to include Bitcoin on its foreign currency reserves.
Federal Reserve Chairman Jerome Powell said recently that the Federal Reserve cannot hold Bitcoin (BTC) in the United States. But President-elect Trump and some lawmakers instead favor setting up a Bitcoin reserve. This proves that the idea is more open in certain countries than in others.
Japan is taking a cautious stance, concerned about the risks of Bitcoin and other cryptocurrencies. Some countries consider holding Bitcoin as reserves, but Japan is looking to ensure stability in its foreign exchange reserves. The economy cannot be disrupted by any new changes, the government wants to make sure of it. For the time being, Japan is reluctant to incorporate Bitcoin into its national reserves.
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