As Bitcoin and other cryptocurrencies grow in popularity, nations across the world are in a dilemma whether to adopt it as an official payment method or not. For these countries, the biggest issue has been how to mainstream and regulate cryptocurrencies to be a safe and acceptable means of payment. Cryptocurrencies are based on Blockchain technology, which is available on open-source platforms that operate outside the financial regulatory framework. Thus, cryptocurrency mining isn’t controlled by any Central Bank.
Why Cryptocurrencies Are Not Officially Accepted
By their nature, cryptocurrencies are innovative and have been created to circumvent official financial systems. Here are some of the things they do offer:
- They are instant and infinitely accessible to anyone interested in mining and exchanging them.
- Cryptocurrencies aren’t country-specific and neither do they belong to any particular institution. They lack an official identity, citizenship, and do not need to be cleared by any government.
- According to fynestuff.com, cryptocurrency users have no restrictions on the time or amount to transact.
- Cryptocurrencies also provide the freedom to use a fiat currency of choice and not one sanctioned by the government.
While governments across the world have continued to allow their citizens to engage in cryptocurrency mining, it may take a while before most of them recognize digital currencies as legal tender. U-today has released listed the most Bitcoin-friendly countries and they include Estonia, the US, Denmark, Sweden, South Korea, The Netherlands, Finland, Canada, The UK, and Australia. However, none of these has taken a bold step towards making cryptocurrencies an official payment.
So, which country is most likely to first accept cryptocurrencies as an official payment? It all depends on the current financial environment within which cryptocurrency users operate. The country that stands out of the crowd is undoubtedly Japan.
According to a CNN report, Japan is one of the very few to have passed legislation to legalize cryptocurrencies. Following the passage of the law in 2016, Japan is taking steps to regularize cryptocurrencies and make them an integral part of the existing financial system.
Measures Undertaken By Japan to Regularize Cryptocurrencies
Towards that end, the Japanese Accounting Standards Board has been working in a framework that will determine how digital currency will be addressed by accounting professionals. This is key when it comes to helping companies account for transactions made using cryptocurrencies.
One of the major effects of the new law is that it has made significant changes to the Banking Act to address what’s happening in the world of Blockchain technology. Even though the law still regards cryptocurrencies and a form of assets, it takes note of the fact that they can be used as payment.
Any proceeds earned from the exchange of cryptocurrencies is subject to income tax by Japanese authorities. However, the biggest step to the provision that states how cryptocurrency exchanges shall be regulated. According to the International Financial Law Review, these organizations will be known as Virtual Currency Exchange Service Provider (VCESP). Apart from having an office in Japan, these organizations will only be registered on condition that each is a stock company with at least $87,300 in terms of capital. That’s the only way they can participate in cryptocurrency trading.
When it comes to the question of hich country is most likely to first accept cryptocurrencies as an official payment?’ it looks like Japan is ahead of the pack. That’s unless the other leading nations show clear intentions of making cryptocurrencies an official payment.