A new Japanese law that defines digital currencies as a legal payment method goes into effect on April 1, 2017. That law applies the country’s know-your-customer and anti-money-laundering regulations to Bitcoin and other cryptocurrencies, requires exchanges to meet capital and cybersecurity requirements, and will subject those exchanges to annual audits.
While the move has been a cause for celebration for digital currency enthusiasts in Japan, it has also created new questions for businesses and others with an interest in the nation’s economic activity. Earlier this week, the Accounting Standards Board of Japan announced that it will begin work on the creation of a framework to help determine how digital currency should be treated for accounting purposes.
As the Nikkei Asian Review notes, the current standards fail to provide Japan’s businesses with guidance about how they should account for cryptocurrency transactions or changes in the value of those currencies. That could leave companies with digital currency holdings vulnerable to sudden shifts in a digital currency’s value. New standards may be needed to ensure that those firms have the guidance they need to safely adjust to these changes.
According to a Fuji Chimera Research Institute study, roughly $1.7 billion of cryptocurrency was in circulation throughout Japan in 2015. That amount is expected to increase to nearly $9 billion by 2020.