Why Japan Refuses to Include Bitcoin in its National Reserves

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The Japanese government has made it clear that it is cautious about including Bitcoin in its foreign exchange reserves. Under current regulations, officials believe that cryptocurrency-related assets such as Bitcoin are not suitable as foreign exchange reserves. Here are some key reasons that explain Japan's position:

1. Bitcoin's volatility problem

The Japanese government insists that the price volatility of cryptocurrencies such as Bitcoin is too large, which is contrary to traditional foreign exchange reserve requirements. The core goal of foreign exchange reserves is to ensure economic stability and liquidity, and the price fluctuations of crypto assets such as Bitcoin are often drastic, which conflicts with the stability requirements of reserve assets. Traditional reserve assets, such as government bonds or central bank deposits, are seen as more stable and predictable options.

2. Japan's reserve management tradition

Japan has always adhered to a prudent reserve management strategy, giving priority to traditional assets that can provide security and liquidity. Under this framework, Bitcoin has difficulty meeting the requirements as a long-term reserve asset due to its high volatility and relatively short history. Therefore, the Japanese government prefers to maintain the existing reserve portfolio, emphasizing traditional assets, to protect its economy from external market fluctuations.

3. Views raised by politician Satoshi Hamada

Despite this, on December 11, 2024, Japanese politician Satoshi Hamada proposed in parliament that Bitcoin's decentralized nature and neutrality as an asset may bring strategic benefits. He believes that Bitcoin, as a globally universal and decentralized asset, may bring some form of diversification or hedging to national reserves. However, this view has not changed the basic position of the Japanese government, which still expresses concerns about Bitcoin's volatility and possible risks.

4. Japan's conservative attitude and regulatory stance

Japan maintains a more conservative attitude in cryptocurrency regulation. Although Japan recognizes the innovation and potential of cryptocurrencies, it pays more attention to the stability of the financial system and the safety of investors. The government and regulators give priority to avoiding the risks brought by market speculation, which makes Japan's policy more cautious.

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