Japanese financial watchdog, FSA, is reportedly discussing
tougher regulations for Japan’s crypto asset market. According to local
media, the regulator intends to devise measures aimed at ensuring its
stability and protection for investors by next summer.
Financial Services Agency Discusses New Crypto Rules in Japan
The Financial Services Agency of Japan (FSA),
has started discussions on the possible introduction of stricter
regulations for crypto assets, Jiji Press revealed on Tuesday. According
to the news agency, the watchdog plans to ensure the new forms of
finance are stable without impeding their development. The measures are
expected as early as summer of next year.
In July, the agency established a special section to oversee digital
and decentralized finance (defi), the report notes. The regulator also
assembled a panel of experts to address the issue. The move comes in
response to progressing technological innovation in the financial field
including cryptocurrencies as well as central bank digital currencies (CBDCs).
In its report on the regulatory debate at the FSA, the Japan Times
remarks that Bank of Japan (BOJ) has launched a digital currency
experiment although it does not intend to issue one at this stage.
Nevertheless, BOJ and other government institutions are paying close
attention to the risks digital currencies may introduce to Japan’s
financial markets.
Quoted by the newspaper, head of the FSA Junichi Nakajima stated
earlier this month that he is open-minded about the potential benefits
of cryptocurrencies as a quick and cheap option to send cash. However,
he pointed out that in Japan they are mostly used for speculation and
investment rather than money transfers. The commissioner also noted that
new challenges stem from the growing number of companies involved in
the defi sector and elaborated:
We need to consider carefully whether it is necessary to make it easier for the general public to invest in crypto assets.
In 2017, Japan adopted a regulatory framework for the crypto space
which introduced registration requirements for digital asset exchanges
operating in the country. Following the 2018 Coincheck hack,
the rules were tightened for exchange operators in order to adequately
address issues with customer protection and user asset management that
were revealed by the massive cryptocurrency theft.
Last week, another Japanese exchange, Liquid, suffered a security breach
resulting in the loss of significant funds in various digital
currencies. Initial reports suggested the hackers stole around $80
million in cryptocurrency, but according to an estimate
by blockchain analytics company Elliptic, the total amounts to over $97
million in crypto assets. Liquid operates under a license from Japan’s
FSA.
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