Japanese Financial Regulators Look to Build Regulatory Framework
The head of the Japanese Financial Services Agency explained that the commission was not against crypto and was looking to develop a legal framework.
Japan’s Financial Services Agency (FSA) has taken a rather stringent approach towards cryptocurrency exchanges since January’s hacking attack on crypto exchange CoinCheck.
As a result, there have been a lot of fears within the cryptocurrency community about the possibility of regulatory crackdowns, especially after a couple of trading platforms received letters from the agency.
However, FSA Chief Toshihide Endo has said that the financial regulator has no plans to curb the industry. He declared that the regulator has decided to take a measured approach towards formulating regulatory frameworks for the country’s cryptocurrency industry.
A Measured Approach
The FSA boss said this when he spoke to Reuters during an interview earlier in the week. His remarks sought to reassure the industry that the agency looked at a modest approach to regulations as the way forward.
Although he maintained that regulatory concerns remained, he took a different view of the issue of curbing crypto. Mr. Endo said that his agency would be focusing on how to bring about adequate regulations within the industry, but which do not stifle the sector.
On the hot issue of cryptocurrency exchanges, the FSA chief said that the agency wanted to develop a regulatory framework that protected the consumers, but at the same time offered room to the exchanges to continue growing.
He said that regulations would always be there, but stifling innovation in the name of regulation would be a bad move.
Mr. Endo said:
“We have no intention to curb (the crypto industry) excessively. We would like to see it grow under appropriate regulation.”
The Japanese authorities have put the country’s cryptocurrency industry under increased scrutiny, with the CoinCheck hack providing a backdrop for serious concerns. The January attack on the exchange saw hackers steal over $500 million worth of NEM tokens.
The financial regulators increased their oversight in the aftermath of the attack, and Japan became the first country to regulate cryptocurrency exchanges with the introduction of a national crypto oversight framework.
The FSA’s investigations found that the majority of the exchanges operating in the country were sloppy in their security operations. The exchanges also lacked robust anti-money laundering (AML) practices.
A number of exchanges in the country have since been warned about their practices, not least Binance that had to relocate its offices to Malta.
In April 2017, the agency released a Services Payment code that required all cryptocurrency exchanges to implement.
In early August, the Financial Services Agency said that it would be setting up stricter requirements on crypto assets and their use as speculative instruments.