Japan Issues New Draft of Regulatory Framework for Cryptocurrencies
The Financial Services Agency (FSA) of Japan has issued a new draft report that details the country’s latest regulatory framework for cryptocurrencies and initial coin offerings (ICOs). Japan, which was hit by two major cryptocurrency exchange hacks this year, began tightening policies to restore consumer protections.
The draft, published on Friday, covers several topics, including hacking and how to regulate operators whose registrations are pending.
According to a report published by Bitcoin.com, the draft was addressed at the 11th study group meeting of the FSA where it met little objection.
- The FSA urges exchanges to ‘join the certified [self-regulatory] association,” Japan Virtual Currency Exchange Association (JVCEA). The FAS will work work together with the self-regulatory association. Operators that fail to register with the association can be shut down.
- The FSA will impose net assets for each crypto exchange “equal to or more than the amount equivalent to the currency and repayment funds” to give consumers protection against a hack.
- The FSA determines that three dealers who are awaiting regulatory approval – Coincheck, Lastroots and Everybody’s Bitcoin – are no longer able to grow their business until they are fully registered with the FSA. Specifically, the exchanges are prohibited from listing additional coins.
- The FSA may apply securities regulations to initial coin offerings (ICOs) through “administrative measures.”
According to the report by Bitcoin.com, the draft introduces several other measures.
“The FSA has proposed measures such as introducing a registration system, maintaining an internal control system, separating the management of exchanges’ and customers’ cryptocurrencies, publishing response policies in case of hacking incidents, and retaining funds for repayment.”
Writes Michael Ou, CEO of CoolBitX, an Asian-based blockchain security company,
“While news of government intervention makes headlines, private companies in Japan are also working hard to improve the crypto market: here are more than a dozen Japanese cryptocurrency exchanges. With a growing number of Japanese businesses accepting cryptocurrencies as payment, and with many startups in Japan’s thriving tech scene, it’s fair to guess that continued investment will inspire continued innovation.”