Bank of Japan governor slams bitcoin and questions its use in settlements

Bank of Japan Governor Haruhiko Kuroda questioned Bitcoin’s use case in an interview yesterday Bloomberg reported.

The bank is currently testing a “digital yen”, the digital version of its fiat currency, but remains shaky on the subject of cryptocurrencies.

“Most of the trading is speculative and the volatility is exceptionally high,” Kuroda said, questioning the use of Bitcoin as an investment vehicle compared to traditional financial assets. “It’s rarely used as a settlement tool,” he added.

The comments are similar to what Federal Reserve Chairman Jerome Powell reiterated earlier this year when he said the crypto market was largely a vehicle for speculation.

The Bank of Japan in Tokyo. (Source: WSJ)

Stablecoins, but not Bitcoin

The Bank of Japan has largely allowed the public use of cryptocurrencies and has generally been cheap versus crypto-related businesses such as exchange services and wallets.

Over $ 1 billion was traded on local exchanges yesterday alone, according to data from Coin Gecko, with Bitcoin, Ethereum, and MonaCoin being crowd-pleasers.

But the bank has largely shifted its focus to stablecoins over the past year – digital currencies that are 1: 1 pegged to fiat currencies such as the US dollar. According to reports, the digital yen is already being tested to a limited extent in a sandbox environment, accentuated by the ongoing coronavirus panic and the need to move away from paper money (which relies on contact).

Kuroda said in that regard that stablecoins have assets to secure their value against cryptocurrencies like bitcoin. “Stable coins also need to meet legal standards and sound governance codes in order for them to become a convenient method of payment in the future,” he added.

While Kuroda says no one is settling down with Bitcoin, the data speaks otherwise. On-chain data from the tracking tool YCharts shows that Bitcoin had over 214,000 individual transactions yesterday, almost half of this year’s high of 398,000 in January 2021.

However, it is still less than that of Ethereum, the most widely used blockchain in the world. The protocol is done 1.2 million transactions yesterday on the chain.

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