Japanese Financial Watchdog To Issue Cryptocurrency And ICO Regulations


Japanese online news outlet, JIJI Press, quotes an unnamed but reportedly well-informed source that the country’s financial regulators are going to issue a legal wireframe for Initial Coin Offerings (ICOs).

limit investment per individual

According to the same source, the Japanese Financial Service Agency (FSA) will limit the amount individual investors can invest in an ICO to better protect those individuals from possibly fraudulent crowdfunding campaigns.

The move is said to be motivated by the research of some ICOs from abroad, which were found to possibly be of a deceitful nature.

FSA will be in charge as the government modifies its laws

The informed source claims that the FSA is going to require those who are conducting such crowdfunding campaigns to register their offerings with the agency if they want to be on the right side of the law.

Since the FSA is going to remain at the position of the financial watchdog which controls the use of cryptocurrencies, the government is going to have to modify the Financial Instruments and Exchange Act and the Payment Services Act.

The bill is reportedly going to be presented to the Japanese parliament during the regular parliamentary session in January.

The end of self-regulation?

Despite the inexistence of regulations, until now, ICOs were allowed in Japan. However, the FSA has issued a warning about the risks involved in funding cryptocurrency-based startups conducting ICOs.

On the other hand, Japan hosts a good number of cryptocurrency exchanges, some of which are among the top 50 in the world. Exchanges also didn’t fall under any existing law but needed to be licensed by the FSA nevertheless. Furthermore, a special non-governmental body of experts was formed, named Japanese Virtual Currency Exchange Association (JVCEA) to supervise trading platforms.

Earlier this year, two Japanese exchanges, Coincheck and Zaif were hacked for a combined amount of $559 million right after the FSA’s issued a business improvement warning to five exchanges operating in the country, which was possibly a sign for the FSA that JVCEA wasn’t fit for the job they were delegated to do.

Still, the mentioned source didn’t reveal if the government is also planning to include exchanges in the new design of the regulations they are preparing to propose to the parliament.

A small percentage of countries have crypto regulations in place

A few countries in the world have a complete regulatory wireframe already in place for cryptocurrencies and ICOs, and the percentage is even lower among the big powers.

One of those that tirelessly work on adopting cryptocurrencies and making itself a hub for crypto-based startups is France. The French government, urged by their minister of finance Le Maire, already lowered taxes for Bitcoin (BTC) trading and has a fine-tuned proposition for a legal act dealing with cryptocurrencies with an emphasis on ICOs, named Plan d’Action pour la Croissance et la Transformation des Entreprises (PACTE).

Other big countries are mostly more conservative, with China banning whatever could be banned, and the USA refusing to dedicate a legal framework to cryptocurrencies and ICO separately of the existing Securities and Exchange Act.

If the information brought to us by this well-informed source is correct, Japan will be one of the few big markets regulating digital assets and new ways of crowdfunding. This could be a catalyst for new startups to begin their ventures in the country as the importance of clear regulations for young businesses is hard to overstate. 

(Source: Jiji Press)

Disclaimer: This is not investment advice. Cryptocurrencies are highly volatile assets and are very risky investments. Do your own research and/or consult an investment professional before investing. Never invest more than you can afford to lose. Never borrow money to invest in cryptocurrencies.

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