Quite simply, because their economy is stuffed, and they are trying to draw attention away from this. Lots of articles published this week about Japan and bitcoin, but very few articles have mentioned the fact that Japan have entered into negative rate territory. Everyone is so tied up on how awesome bitcoin is, or the Mt. Gox thing – yes an absolute disaster – but come on people, let’s think about the big picture.
Negative interest rates are not a good thing. They have been very low for years, and the Japanese economy is still faltering. Without going into a full discussion on why negative interest rates are bad; it is adequate to say that interest rates are a means of stabilizing an economy by creating a balance between borrowers, savers, and investors. An imbalance will result in boom and bust conditions, and Japan have been in a bust for a long time now.
Remember, this is not the first time Japan have considered regulating bitcoin. Back in 2014, they considered it, and then declared it not to be treated like a currency. Certainly, the fear of another Mt. Gox is on the mind of the Japanese government as bitcoin is much more popular there now, and the continual rush away from a weakening Yen to bitcoin (and other assets) is a worry. Precious metals and other ‘safe’ investments can never be treated as a currency, but bitcoin and other cryptocurrencies can.
If bitcoin is a legal currency in Japan then they have the ability to regulate and tax it. So while everyone is hocking their Yen for bitcoin, the currencies will essentially become equivalents and either bitcoin will equalize to the value of the Yen, or the Yen will equalize to bitcoin. Given the global nature of bitcoin, it’s hard to imagine the first scenario.
I see the recognition of bitcoin as a currency a good thing, but it has to be done for the right reasons. Having registered exchanges and consumer protection are the right reasons, and yes that is partly the reasoning, but if it truly is to partially bolster their economy (remember Japan is third largest economy) than it can only lead to disaster.
In any case, bitcoin will remain regardless of whether or not any country treat it as a legal currency. The means of a peer-to-peer global transaction is an outstanding human achievement, and in time, will bring wealth to regions that are experiencing extreme poverty, hyper-inflation, or insane governmental controls. It may not always be called bitcoin, and it may still be volatile decades in the future, but there is no doubting that the concept of a global currency is here to stay.