Japan will allow digital wages starting in 2023, but crypto is excluded
Japan will allow companies to send salaries to money transfer funds. However, it will not allow this for cryptocurrency.
Japan’s Ministry of Health, Labor and Welfare has approved a revision of its Labor Standards Act, which bans the use of virtual currencies in digital wage payments. The revision of the new rules will come into force in April 2023.
The revision of the rules focuses on digital salary payment. Specifically, it allows the payment of salaries to the accounts of money transfer service providers. This includes foreign exchange services if certain requirements are met. The government has revised the law because there has been a proliferation of “cashless payments and diversification of money transfer services” in the country.
However, the rule change excludes crypto assets. Salary cannot be transferred to money transfer companies in the form of crypto. Only those currencies that can be converted directly into cash can.
This is not an outright ban on crypto as a means of wage payment in Japan. The country may yet change the rules in the future, perhaps when there is more regulation for the crypto market. Meanwhile, other countries are crypto in salary payments.
Crypto, a popular alternative for salary payments
Individuals in developing countries have used cryptocurrencies for salary payments. Argentina, Brazil and Turkey, as well as nations in Africa, are seeing their citizens accept Bitcoin or stablecoins because it is faster and cheaper for international money transfers.
International transfers have been one of the biggest selling points for crypto, as there is only a marginal loss for a crypto transfer. With traditional bank transfers, international transfers often cost 2-5% of the total amount transferred.
As remote work becomes more popular, those in developing countries may see even greater use of crypto payments. Volatility is still popular, but this has also decreased in the crypto market, at least in recent weeks.
Japan is opening up more to crypto
While crypto for wages may not yet be a reality in Japan, the government has made progress in other areas. Regulators in the country have recently relaxed laws related to the crypto market, allowing crypto exchanges to more easily list digital currencies.
It has also tightened rules related to money laundering. The country will monitor money transfers that use crypto to prevent money laundering, and require the sharing of customer information. The authorities can now also seize assets. Japan aims to boost its economy by making the regulatory landscape more welcoming to startups.
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