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Japan is putting plans for a national Bitcoin reserve aside at the moment due to a lack of information and concerns over volatility.

Prime Minister Shigeru Ishiba has clarified the government’s stance on the matter in response to an enquiry from Satoshi Hamada, a member of the House of Councilors from the Party to Protect the People from NHK.

Hamada was enquiring about the government’s opinion on whether the country should follow in the footsteps of nations like the United States in adopting Bitcoin as an asset for its foreign currency reserves. 

In response, the government said it was not fully aware of the measures being taken by the US and other countries. 

Notably, discussions regarding the adoption of Bitcoin as a reserve asset remain in the early stages all across the globe, making it difficult for Japan to present an official stance at this time.

Ishiba also clarified that Japan does not classify cryptocurrencies as foreign exchange assets, and its foreign currency reserves are primarily aimed at stabilising foreign currency-denominated assets and the foreign bond market.

The reserves are managed under a Special Account framework, which prioritises safety and liquidity and, as a result, is deterring the government from adding risk assets. 

Cryptocurrencies, including Bitcoin, are viewed as incompatible assets due to their high volatility and unpredictable price fluctuations.

While Japan has chosen to tread these waters lightly, the US Federal Reserve has gone out to clarify it cannot hold Bitcoin.

However, incoming President Donald Trump and several Republican lawmakers have pushed for the establishment of a Bitcoin-backed reserve.

Pro-crypto Senator Cynthia Lummis introduced a bill earlier this year, dubbed the BITCOIN Act of 2024, which proposes that the US treasury acquire 1 million BTC over five years and establish a national Bitcoin reserve. 

Proponents claim Bitcoin can act as a hedge against inflation, reduce the national debt, and strengthen the position of the US as a global financial leader.

Crypto remains a key area of focus in Japan despite the government’s current stance, and regulators have continued to push for measures that foster the economy as the nation has witnessed a surge in crypto adoption.

Last month, the government agreed to consider tax reforms on crypto assets, including a proposal to lower the tax rate on cryptocurrency gains to 20% from the current 55%, aligning them with stock market profits.

Prime Minister Ishiba has also vowed to use blockchain technology and NFTs as tools to strengthen the island nation’s economy, confirming the nation’s pro-crypto approach.

Amid this backdrop, Japanese businesses have shown a keen interest in holding Bitcoin on their balance sheets to counter the effects of the nation’s economic challenges.

Over the past year, several firms have either adopted or expanded their Bitcoin holdings.

MetaPlanet, for instance, has steadily increased its Bitcoin reserves through regular investments. 

Further, companies like Boyaa Interactive and Remix Point have also made strategic acquisitions of the flagship cryptocurrency.

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