Most cryptocurrencies are completely transparent by nature. This makes it easier to track money flows and identify users. Interpreting this information in a convenient manner will require proper tools to be developed. In Japan, a new software for this specific purpose will be introduced shortly.
Tracking Cryptocurrency Across Japan
Bitcoin has obtained legal status in Japan earlier this year. Despite this positive development, the cryptocurrency industry remains subject to scrutiny. Government officials want to ensure that no illicit activity is taking place when using Bitcoin or other similar digital currencies. To do so, they aim to track the money flows of all common cryptocurrencies used in Japan today.
To aid in this task, a new tool will be introduced by the Japanese National Police Agency. This tool will allow for the tracking of all cryptocurrency transactions of the present and past. It is not unlike other tools used by companies such as Chainalysis, although technical specifics remain unclear at this stage. According to local sources, an unnamed private company aided the NPA in bringing this software to life.
One interesting aspect of this tool is its involvement in cryptocurrency exchange behavior. Officials are confident this software can identify which exchange is used to buy, sell, or trade cryptocurrencies. That makes it easier to identify individual users linked to specific transactions on the network. It is another step toward further legitimizing Bitcoin in Japan.
The Rise of Blockchain Analysis
This latest effort in Japan shows blockchain analysis solutions are in high demand. In the Western world, companies like Chainalysis are making a big impact with similar tools. Its services are employed by many US-based government agencies. Among its clients are agencies such as the IRS, DEA, and so forth.
By taking this step, Japan is positioning itself as a leader for cryptocurrency growth. Thanks to its positive regulation and the desire to curb illicit activity in a positive manner, the tone is set for other countries to follow. Analyzing transactions and reporting on suspicious activity will play an integral role in that process.
This news comes at an opportune time for Japan’s cryptocurrency industry. Not too long ago, the FSA confirmed that all crypto exchanges need to step up their game to provide proper services. This is another step toward elevating cryptocurrency out of the shadows and into mainstream society. These guidelines will help establish a more competitive ecosystem everyone will benefit from.
What do you think about Japan’s decision to track crypto transactions? Will it help legitimize the crypto industry in the region or simply drive it underground? Let us know what you think in the comments below.
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