New Regulatory Guidelines To Be Proposed Next Year
Due to the large number of scams carried out via ICOs throughout the world, Japan’s regulatory authorities are planning to place a limit on how much the nation’s citizens can invest in ICO-related projects. Local sources also said that business owners who issue their own digital currencies must first register with the FSA.
In order to introduce new regulations for ICOs, the FSA will be submitting draft bills – which will aim to revise the country’s existing guidelines on exchange laws, payment services laws, and financial instruments. The drafted proposals will reportedly be submitted during the parliamentary session in January 2019.
As CryptoGlobe reported in July of this year, the FSA has been considering changes to the way it has been regulating digital asset exchanges. The amendments included regulating crypto trading platforms according to the Japanese Financial Instruments and Exchange Act (FIEA).
Many On-Site Inspections
The guidelines specified by the FIEA require that cryptocurrencies be treated as a financial product, instead of as a type of electronic payment method. Following the Coincheck hack, during which $534 million in NEM (XEM) tokens were stolen (in January 2018), Japan’s financial regulators have been trying to enhance consumer protection.
Throughout this year, the FSA has performed many on-site inspections of local crypto-related firms. Moreover, the financial regulator has only licensed 16 digital currency exchanges and has not issued any new licenses to blockchain and crypto-related businesses.
As CryptoGlobe covered in late August, the FSA reported that there were 160 new digital asset exchanges who were looking to set up their operations in Japan. At present, it’s unclear whether Japan’s regulators will be authorizing additional crypto businesses to operate in the country.
Complying With New Regulations, 16 “Quasi” Operators
Notably, the FSA’s crackdown on digital currency trading platforms (this year) has led to some local exchanges shutting down temporarily. Companies may have had to make changes to their standard operating procedures (SOPs) before resuming their business – in order to comply with the regulator’s updated set of regulations.
In addition to 16 licensed exchanges, there are 16 other “quasi” crypto trading firms in Japan. The “quasi” operators do not yet have a license to provide services, however, their applications are being reviewed by the FSA and the regulator has granted them a provisional license to offer their products and/or services in Japan.