Financial authorities in Japan are considering amendments to existing legislation that will classify digital currencies as a legal medium of exchange in the country. According to a report by the Nikkei Asian Review, the Financial Services Authority (FSA) in Japan will submit a revised version of the bill to Japan’s legislative body, which will vote on it in the current Diet session (January 4th – June 1st).

As it stands currently in Japan, virtual currencies are recognized, but are not not given the same legal standing as traditional currencies.

“They are now recognized as objects but are not treated on a par with their more established counterparts.”

FSA’s proposal requires that digital currencies be convertible to fiat, and that all digital currency exchanges in the country be subject to tighter oversight and reporting requirements.

Should this amendment pass, digital currency businesses and users in Japan will have much better oversight and legal protection, which in turn may help catalyze the fintech sector in the country.

“The FSA sees such a definition possibly helping to develop the financial technology sector.”

The collapse of MtGox, the world’s biggest virtual currency exchange, highlighted the need for a proper regulatory framework, as millions of customer deposits are currently in limbo due to an ongoing investigation that has become incredibly complex and convoluted.

The FSA believes that this amendment will prevent a repeat of another MtGox-style fraud.

“Creating a legal framework will allow virtual currencies to spread more safely.”

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