Future of Digital Currency: Evaluating Bank of Japan’s 2023 CBDC Pilot Program

  • Japan’s XRP Popularity Skyrockets
  • The Proposed Cryptocurrency Licensing Regulation in Hong Kong

Uchida Shinichi, Japan’s central bank executive director, announced in a Liason and Coordination Committee meeting that the bank intends to introduce a central bank digital currency. The release is set to be on April 2023, after a prosperous proof of concept (PoC).

A central bank digital currency not previously looked at in the proof of concept is the subject of the pilot program, which tries to determine its technological viability. It also aims to use private businesses’ technical know-how and operational expertise.

Shinichi asserts that for a CBDC to function, links between various systems, including facilitators and central banks, must be made. So, the pilot program’s main objective will be to connect the CBDC with external systems and run several experiments to evaluate the entire process.

According to current plans, the Bank of Japan will only permit simulated transactions during the trial phase, with genuine transactions between businesses and customers not being authorized.

The pilot program also seeks to improve design through interactions and talks with commercial sectors. For example, Paytech and retail payment companies will be a part of a new CBDC Forum established to help with this. This partnership is anticipated to result in CBDC design advancements.

Shinichi said that the pilot program would begin with specified goals and that the experiment’s scope would gradually increase in a controlled and planned manner. Then, the group will decide how to proceed with the pilot program accordingly.

It implies that additional elements are involved in a payment system’s widespread acceptance, operation, and design. Shinichi said that gradually exploring a CBDC will guarantee that the adjustments required for a CBDC to be generally embraced are achieved.

Japan’s XRP Popularity Skyrockets

According to a BITMAX study from June 2020, which revealed that it was comparable to Bitcoin in popularity, with Ethereum coming in a distant third, XRP retains a solid fan base in Japan and is commonly regarded as the second most widely used cryptocurrency in the country.

A City of Hong Kong University study credits the partnership between SBI Holdings and Ripple to XRP’s breakthrough in Japan. In addition, the fact that both companies jointly own SBI Ripple Asia and that Yoshitaka Kitao, CEO of SBI Holdings, held positions on Ripple’s board of directors is noteworthy.

According to the survey, SBI is Japan’s top prestigious venture capital business. In contrast to Western civilization, the Japanese place a great value on institutions, according to a 2021 report from World Coin Data quoted in the paper. As a result, XRP enjoys extraordinary trust in the nation because of the relationship between Ripple and SBI.

The Proposed Cryptocurrency Licensing Regulation in Hong Kong

The Hong Kong SFC (Securities and Futures Commission) has launched a public consultation procedure allowing authorized cryptocurrency exchanges to provide services to retail investors. The commission is looking for public opinion on this issue.

On February 20, the SFC made public the public consultation procedure that introduced a new licensing scheme for the cryptocurrency sector. The plan requires every centralized cryptocurrency exchange operating in Hong Kong to apply for a license from the regulatory authority.

Determining whether regulated cryptocurrency exchanges should be allowed to offer services to prospective investors in the nation is one of the key focuses of the public consultation process, as well as what efforts are being made to set up various trustworthy investor protection measures. Accordingly, the commission on this subject is seeking the public’s opinions.

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