Although it is illegal for politicians in Japan to receive donations of Japanese yen, stocks, bonds and securities, it seems that a loophole in election donation laws will allow politicians to accept cryptocurrency donations to fund their campaign activities,
Japan’s Yomiuri Shimbun reports in a recent article that although Japanese law states that, political parties are required to publicly report donations made in the form of traditional asset, cryptocurrencies are not considered among the standard avenues forbidden from political campaigns.
As a result of this loophole, politicians and the political parties that they represent can cryptocurrencies as legal political donations and most importantly, politicians are not required to report the source of these funds.
If donations to campaigns and parties are made by cryptocurrency donations, politicians in Japan are not obligated to record and report every transaction to the government for clearance. Politicians can therefore avoid the tedious task of recording every donation, effectively saving them the cost of hiring personnel to perform the reporting work, but this also gives politicians the ability receive unknown donations.
Many Japanese citizens have criticized the government on social media and have said that the Japanese Financial Services Agency (FSA) has not done enough to regulate cryptocurrency in Japan, and that financial transaction regulations should include cryptocurrencies and that both donations and payments using cryptocurrencies should be reported to the government.
The issue of cryptocurrency donations has brought attention on the need for the FSA and other government agencies and entities to the need to upgrade existing regulations related to cryptocurrencies and digital assets to keep pace with rapid changes in technology.
Japan’s political donation laws serves as an example of the anonymity and privacy of cryptocurrencies. The fact that technology innovations in areas such as cryptocurrency and blockchain are relatively free from current legal regulations highlights the necessity for laws to be upgraded at a faster pace so that they keep up with new technologies.
However, many experts point to the fact that most Japanese bureaucrats and politicians do not have sufficient knowledge of new technologies that would allow for them to create credible and effective regulation.
Those with knowledge come from the financial and technology industries but Japanese citizens are not sure whether these groups will advise of new regulations that benefit business, the citizens or the politicians and so they are adamant that political donations that utilize cryptocurrencies should be reported in a transparent manner. They want to know who is serving in their best interests.