Japan has seemingly started loosening its attitude towards initial coin offerings (ICOs) as a working group backed by the country’s government recently proposed new guidelines that are set to legalize and regulate token sales.
Japan Looking To Legalize ICOs
With recent cryptocurrency exchange failures, such as the $530 million hack the now-recently acquired exchange Concheck suffered, Japan is considering a new approach which would give strict regulatory definitions to ICOs, and hopefully counter illegal activities.
According to research commissioned by the Japanese government, legislation would allow lucrative ventures such as ICOs and cryptocurrency exchanges to continue trading. All while allowing the government to obtain a greater awareness of these activities.
The research was conducted by Japan’s ICO Business Research Group, a task force that includes academics, bankers, and lawmakers. The group called for the government to legalize ICOs, and set clear rules for the industry, so as to encourage its growth while protecting investors.
In its report, the group wrote:
“ICO is still in its infancy and has no industry practices yet. Appropriate rules must be set to enable ICO to obtain public trust and to expand as a sound and reliable financing method.”
These regulations would see ICO operators identify investors by performing know your customer (KYC) checks to counter money laundering, while protecting shareholders to prevent illegal practices, such as insider trading.
Moreover, ICO operators would need to keep contributors informed regarding what’s going on with their projects, so investors know they are sticking to their roadmap.
According to Bloomberg, Japan’s Financial Services Agency (JFSA) is set to consider the proposal as soon as this month, although it may take several years before its put into practice.
While Japan takes on a strong overwatch position with ICOs, the US Securities and Exchange Commission (SEC) has since had more ICOs added to its list of fraudulent ones. The most recent example being Centra Tech, a crypto startup endorsed by various celebrities, including boxer Floyd Mayweather and artist DJ Khaled.