The Japanese government is moving ahead swiftly with plans to develop a secure and regulated network for the transference of cryptocurrency that will help fight fraud and money laundering.
The new network will work similarly to the existing SWIFT system which facilitates international money transfers and could potentially replace the network in the future. SWIFT (Society for Worldwide Interbank Financial Telecommunication) has been around for almost half a century and is often lambasted for being slow and expensive. However, until now, no government of financial institution has put forward meaningful plans to upgrade or replace the system.
Top secret development
As reported yesterday by news network Reuters, the Japanese Ministry of Finance in collaboration with the country’s Financial Services Agency (FSA) originally put forward plans for the network in June last year. The plans were approved by the Financial Action Task Force (FATF), an international body comprised of 37 member countries with the aim to combat money laundering and financial fraud on a global scale.
Specific details on how the network will operate are being kept strictly under wraps for security reasons. Crypto exchanges wishing to operate in the country would likely need to process all transactions via a central government-authorized agency, similar to traditional banking. However, it is unclear whether this would help to eradicate the majority of crypto-based money laundering, as this already operates outside of government control and the new system may push it further underground.
A history of hacks
Japan has a long history of cryptocurrency-related crime, which explains the countries desire to hastily develop stricter regulations for the sector. Most famously, Mt Gox, the worlds largest Bitcoin exchange at the time, went into liquidation in 2014 following a loss of $450 million worth of Bitcoin. Since then, several more crypto exchanges in the country have been hacked, with the $500 million Coincheck hack in early 2018 being the largest.
Most recently, Japanese cryptocurrency exchange BITPoint was robbed of $32 million in cryptocurrency only last Friday, July 12th. It is now estimated that the total amount of cryptocurrency stolen worldwide is over $1.4 billion, with more than half of that occurring in 2018 alone.