Japan Pledges to Establish Global Network for Crypto Payments
In a worsening climate for digital asset platforms and skepticism about Facebook’s Libra, Japan has come up with a renewed effort for cryptocurrency adoption.
The Japanese government is at the helm of a new program to establish a payment network based on cryptocurrency, which could compete with the use case of the SWIFT payment system, reported Reuters early on Thursday.
A source, that for now refuses to be named, stated that the government’s aim is to build the network in the next few years, without giving additional details. According to the source, Japan will fully comply with the recent Financial Action Task Force (FATF) requirements and will offer international cooperation on the project.
The news arrives at a time when national governments have expressed skepticism about payment networks based on a digital asset. The hawkish stance was mostly inspired by Facebook’s announcement of Libra, a digital asset with a large potential global outreach.
There are no details on the protocol that Japan will use for international remittances. So far, IBM has been leading innovation in the field of cross-border payments, though only as a test and with limited usage. Ripple and the XRP network and asset have also boasted of potentially displacing SWIFT, though acceptance has only reached the test stage.
Japan has been at the forefront of cryptocurrency usage and adoption, though the journey has not been glitch-free. Starting with Mt. Gox and its major hack in 2013, Japan also suffered a series of setbacks as newer exchanges saw funds stolen due to human error. The country is working on standards for market operators to ensure user safety. Stricter rules in Tokyo evicted some exchanges, with Binance at the lead. The Binance exchange moved its headquarters to Malta to escape the harsher rules and regulations in Japan.
In theory, any digital asset could be used to send funds globally, but there remains the issue of which network is trustworthy enough. Various structures have been proposed to boost trust, as older networks like Bitcoin (BTC) are seen as too slow and depending on anonymous nodes. Newer networks rely on various types of delegates to produce blocks and achieve consensus, but they are also prone to errors, and transaction reversibility remains an issue.