Japan has taken a cautious approach to the idea of incorporating Bitcoin into its national reserves, citing concerns about its high volatility and its inconsistency with existing foreign exchange frameworks.
In an official response on December 20, Prime Minister Shigeru Ishiba addressed a query from Senator Satoshi Hamada of the NHK Protection Party. Hamada had suggested that Japan consider converting part of its foreign exchange reserves into Bitcoin, referencing similar discussions in other nations, including the United States.
Bitcoin Does Not Qualify as Foreign Exchange
The Japanese government clarified its stance, stating that cryptocurrencies like Bitcoin do not meet the legal criteria for foreign exchange under current regulations. “Japan’s reserves are designed to stabilize foreign currency-denominated assets and bond markets, prioritizing safety and liquidity,” the statement read.
Officials emphasized that Bitcoin's extreme price volatility is fundamentally at odds with the objectives of Japan’s reserve strategy.
Additionally, the government noted that while there has been speculation about other nations considering Bitcoin reserves, global discussions on the topic remain in their infancy. “It would be difficult for the government to express a view on the specific situation,” the response stated.
A Global Debate
Japan's cautious stance comes amid a global debate on Bitcoin's potential as a strategic reserve asset. In the United States, Federal Reserve Chair Jerome Powell recently affirmed that the Fed cannot hold Bitcoin under current legal frameworks. However, the incoming administration of President-elect Donald Trump, along with some Republican lawmakers, has expressed interest in establishing a strategic Bitcoin reserve to position the U.S. as a leader in the digital asset space.
Japan’s Conservative Approach
Japan’s approach aligns with its historically conservative financial policies, prioritizing stability over speculative assets. While the nation has been a pioneer in crypto adoption, recognizing Bitcoin as legal tender and fostering blockchain innovation, its reserve strategy remains firmly rooted in traditional assets like foreign currencies and bonds.
The statement concluded by reiterating the government’s commitment to safeguarding Japan’s economic stability, signaling that cryptocurrencies are unlikely to play a role in the country’s reserves in the near future.
