A senior Bank of Japan (BoJ) official said the group of 7 nations urgently needs a common framework to regulate cryptocurrencies before they “destroy” the global settlement system.
One of the main reasons given for this was the possibility that Russia used cryptocurrencies to avoid the sanctions that were imposed on it after the invasion of Ukraine.
According to a Reuters report, the BoJ believes that the cryptocurrency is under the spotlight due to the conflict between Russia and Ukraine and that a loophole could be created that would allow Russia to avoid international sanctions by using it.
In fact, Kazushige Kamiyama, head of the BOJ’s Payment and Settlement Systems Department, says it would not be difficult to create an individual global settlement system using stablecoins, which could include the yen, the US dollar or the euro.
Kamiyama urges the group of seven advanced economies to move quickly to update current rules that will take digital currencies into account. kamiyama said:
“The G7 nations are now working together on this front, while sharing information on current developments,”
However, Kamiyama’s comments run counter to expert opinion on Russia’s ability to use cryptocurrencies with any degree of success. The Financial Crimes Enforcement Network (FinCEN) stated that the use of cryptocurrencies by the Russian government was “not necessarily practicable.”
It can probably be said that the BoJ is much more interested in designing and rolling out its own central bank digital currency (CBDC). Any development in crypto regulation could have knock-on effects for a central bank digital yen.
Kamiyama noted that the BoJ was keen to keep up with developments and did not want to be left behind.
“Given the number of advanced nation central banks collectively, dramatically and simultaneously moving into CBDC, this could cause major changes to the settlement system in the future,” he said. “Japan needs to make sure it’s not left behind.”