The world of cryptocurrency could be brought into the worldwide international official banking system. The digital currency that rests on the foundation of confidentiality, privacy, and anonymity may soon have a platform for legitimate global trading. Japan intends to lead a revolution that attempts to establish a legal international platform suitable for managing the exchange of cryptocurrencies. An international team was recently approved after the country suggested the same, and hence it appears the development is proceeding at an accelerated pace.
In an attempt to bring legitimacy to all the valid cryptocurrency platforms, Japan wants to create a verifiable, traceable and in essence, a legitimate platform for buying, selling, managing, and trading cryptocurrency. The system, if deployed, would essentially be quite similar to the existing SWIFT platform. The SWIFT platform and the SWIFT Codes today facilitate transactions made worldwide in traditional fiat currencies.
The prevalent SWIFT system is heavily controlled and regulated by the core banking system. As such, trading currencies in the current systems attracts significant processing and handling fees. Not to mention, all the transactions come under the purview of the law. In addition to a high level of legitimacy, there’s also traceability and accountability. Needless to add, the very existence and development of cryptocurrency primarily go against all the fundamentals that govern the SWIFT platform. Hence, it will be interesting to see how Japan and the rest of the world will work with cryptocurrencies after the deployment of the new systems.
Japan Already Developing The Platform That Will Allow Legal Transactions Using Cryptocurrency?
The news about Japan developing an international platform to allow the legal exchange of cryptocurrency that will be similar to the SWIFT banking system is yet to be officially corroborated. However, the groundwork for the same has already been laid. A team similar to the Financial Action Task Force (FATF) was approved last month. Incidentally, the international team that would monitor the creation of the platform and possibly oversee its implementation as well, was suggested by the Japanese Ministry of Finance and the Financial Services Agency (FSA).
Japan’s intention of establishing the platform for legal trading of cryptocurrency across the world reportedly stems from the increasing use of the purely digital currency to conduct illegal activities and crimes. The country’s officials claim they want to tackle money laundering. The most primary aspect of curbing money laundering is monitoring the flow of the money and tracing the same from origin to delivery. The trail that today’s official currencies are obligated to leave in the digital world makes it possible to spot instances of money laundering. Since cryptocurrency simply doesn’t exist in the physical world, adding traceability should significantly improve tracking and stopping illegal activities.
Japan is said to be leading the creation of an international cryptocurrency payments network similar to banking network SWIFT. https://t.co/jieyDSfakZ
— CoinDesk (@coindesk) July 18, 2019
There are several legitimate traders and investors in cryptocurrency. Platforms and virtual currencies like Bitcoin (BTC) and Ethereum (ETH) are quite popular. The exchanged value of cryptocurrencies on such platforms regularly exceeds millions of dollars. However, these digital currencies are commonly and increasingly associated with criminal purposes. They have become a popular choice of money to conduct the purchase of illegal goods and services.
Japan’s platform aims to solve a relatively new but highly problematic phenomenon that evolved due to the increasing use of cryptocurrency to fund illegal activities. “Cryptocurrency mixing” is a relatively new activity. This involves offering platforms and services that “clean up” illegal funds or black money. Several such “washing” services attempt to offer legitimate currency in the digital or physical format in exchange of cryptocurrency funds amassed through illicit activities. The most prominent example of such a mixer and washer platform is Bestmixer. Incidentally, this particular platform was seized and its activities stopped by Europol.
How Will Japan’s Platform For Legalized Worldwide Trading Of Cryptocurrency Work?
Sources that claim to know about the development of the legal, international exchange for cryptocurrency, claim the network could be established in only a few short years. They add the country’s government intends to share the platform and seek the cooperation of other countries in the scheme. It is painfully obvious that Japan will need the highest level of cooperation and collaboration from all the major currency exchanges, banking systems and the governments across the world if it hopes to establish the platform.
In addition to the above-mentioned parties, Japan would also need the support and participation of cryptocurrency exchanges worldwide. Interestingly, these platforms are already demanding an international effort, funding, development, and acceptance of their activities. However, several platforms insist on retaining the intrinsic nature of the cryptocurrency. In other words, quite a few of the platforms are adamant about keeping the fundamental qualities of the digital currency which includes, confidentiality, privacy, and anonymity intact. Needless to mention, striking a balance between such aspects would be a big task.
— The Currency Analytics (@TheCurrencyA) July 19, 2019
Facebook’s recent attempted foray into the world of cryptocurrency was met with severe criticism and resistance. Facebook’s Libra, which was previously called GlobalCoin, was strongly opposed by legislators and banking institutions. Regulators across the world reacted with panic and essentially demanded Facebook dismantle Libra. Incidentally, Facebook wanted the legal banking system, currently working with fiat currencies, to be part of Libra from the very beginning. The social media giant wanted Libra to be integrated and backed by legal currency and even wanted it to match the value of the dollar openly.
Given the confusion and fear surrounding cryptocurrency, a few countries like India have outright banned all forms of the digital currency. Moreover, its strong preference by antisocial elements, hackers, designers of ransomware, and other criminal elements, has been a cause of rising concern.
The G20 wants any platform for cryptocurrency to obtain, hold, and hand over account holder information. The group claims such information will help clamp down on money laundering and criminal activity. The G20 group recently confirmed it was backing a new set of cryptocurrency guidelines. Needless to add, the guidelines, if enacted, would force cryptocurrency trading platforms and exchanges to hand user data over to regulatory bodies.
SWIFT Banking System May Just Be A Ideal Platform For Legal International Trading Of Cryptocurrency
There is little doubt that a high volume of cryptocurrency trading involves illegal activity. Owing to the inherent qualities of the same, several criminal elements demand they be paid only in crypto-coins. Such payments remain completely confidential and untraceable. There have been quite a few successful heists, wherein even some government departments have meekly paid hackers who held critical and sensitive information hostage through ransomware.
Despite the stigma associated with cryptocurrency, there are millions of legitimate buyers and sellers of the same. Such customers, users, and agencies would surely benefit from gaining even more legality for their digital currencies. Moreover, such a platform could significantly bring down the volatility of cryptocurrency. If that’s not enough, the SWIFT banking system has been getting quite fast and efficient even across borders.
The platform is confident that buying and selling of cryptocurrency through the new platform envisioned by Japan could significantly reduce the lays often caused by local clearance settlement. A platform that facilities international legitimate trade of cryptocurrency certainly has its merits but it would surely be despised by several who rely on the same for illegal activities.