Japan’s central bank issues digital currency

TOKYO (Reuters) – The Bank of Japan (BOJ) began experiments on Monday to study the feasibility of issuing its own digital currency, joining efforts by other central banks that are aiming to match the innovation in the field achieved by the private sector.

The first phase of experiments, to be carried out until March 2022, will focus on testing the technical feasibility of issuing, distributing and redeeming a central bank digital currency (CBDC), the BOJ said in a statement.

The BOJ will thereafter move to the second phase of experiments that will scrutinise more detailed functions, such as whether to set limits on the amount of CBDC each entity can hold.

If necessary, the central bank will launch a pilot programme that involves payment service providers and end users, BOJ Executive Director Shinichi Uchida said last month.

“While there is no change in the BOJ’s stance it currently has no plan to issue CBDC, we believe initiating experiments at this stage is a necessary step,” Uchida told a committee of policymakers and bank lobbies looking into CBDC.

Global central banks are looking at developing digital currencies to modernise their financial systems, ward off the threat from cryptocurrencies and speed up domestic and international payments.

While China leads the pack, the BOJ has been speeding up efforts to catch up with a plan announced in October to begin experimenting on how to operate its own digital currency.

Crypto firm Blockchain.com raises $300 million, valued at $5.2 billion

Cryptocurrency firm Blockchain.com said on Wednesday it had raised $300 million in its latest funding round at a valuation of $5.2 billion.

The round was led by DST Global, Lightspeed Venture Partners and VY Capital, the London-based company said

Blockchain.com offers digital wallets for storage of cryptocurrencies as well as retail trading and other services for larger investors.

Bitcoin soared to a record just shy of $62,000 this month as mainstream firms and investors increasingly embrace cryptocurrencies, leading to ballooning valuations of related companies.

Blockchain.com said last month it raised about $120 million, with investments from Alphabet Inc’s venture capital unit.

India proposes law to ban cryptocurrencies: Create official digital currency

India plans to introduce a law to ban private cryptocurrencies such as bitcoin and put in place a framework for an official digital currency to be issued by the central bank, according to a legislative agenda listed by the government.

The law will “create a facilitative framework for creation of the official digital currency to be issued by the Reserve Bank of India (RBI),” said the agenda, published on the lower house website on Friday.

The legislation, listed for debate in the current parliamentary session, seeks “to prohibit all private cryptocurrencies in India, however, it allows for certain exceptions to promote the underlying technology of cryptocurrency and its uses,” the agenda said.

In mid-2019, an Indian government panel recommended banning all private cryptocurrencies, with a jail term of up to 10 years and heavy fines for anyone dealing in digital currencies.

The panel has, however, asked the government to consider the launch of an official government-backed digital currency in India, to function like bank notes, through the Reserve Bank of India.

The RBI had in April 2018 ordered financial institutions to break off all ties with individuals or businesses dealing in virtual currency such as bitcoin within three months.

However, in March 2020, India’s Supreme Court allowed banks to handle cryptocurrency transactions from exchanges and traders, overturning a central bank ban had that dealt the thriving industry a major blow.

Governments around the world have been looking into ways to regulate cryptocurrencies but no major economy has taken the drastic step of placing a blanket ban on owning them, even though concern has been raised about the misuse of consumer data and its possible impact on the financial system.

Bitcoin value surges past $30,000 (£22,000) for first time

Bitcoin has passed $30,000 (£22,000) in value for the first time, continuing a recent sharp rise.

The virtual cryptocurrency hit $30,823.30 at 13:13 GMT on Saturday, just weeks after soaring above $20,000 for the first time.

In the past year Bitcoin has almost quadrupled in value thanks to interest from large investors looking for rapid profits.

Some analysts think it could rise even further as the US dollar drops further.

While the value of the US currency rose in March at the start of the coronavirus pandemic as investors sought safety amid the uncertainty, it has since dropped due to major stimulus from the US Federal Reserve. The currency ended last year with its biggest annual loss since 2017.

Bitcoin is traded in much the same way as real currencies like the US dollar and pound sterling.

Recently it has won growing support as a form of payment online, with PayPal among the most recent adopters of digital currencies.

But the cryptocurrency has also proved to be a volatile investment. 

A previous rally in 2017 saw it come close to breaking through the $20,000 level. But it has also hit extreme lows and has fallen below $3,300 previously.

It passed $19,000 in November last year before dropping sharply again.

Bank of England Governor Andrew Bailey cautioned over its use as a payment method in October.

“I have to be honest, it is hard to see that Bitcoin has what we tend to call intrinsic value,” he said. “It may have extrinsic value in the sense that people want it.”

Mr Bailey added that he was “very nervous” about people using Bitcoin for payments pointing out that investors should realise its price is extremely volatile.