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FSA Japan Considers Imposing Stricter Regulation on Cryptocurrency
The updated regulation will be designed to provide better protection to Japanese investors.
According to reports of Jiji Press, the Financial Services Agency (FSA) in Japan has commenced discussions to impose stricter regulations for the cryptocurrency industry in a bid to better protect Japanese investors.
FSA, which is Japan’s financial regulator, established a dedicated section as well as a team of financial experts in July to provide assistance to the government in monitoring digital and decentralized finance (DeFi). The agency has also been designated to keep a track of central bank digital currency initiatives and developments in the crypto sector.
The FSA intends to impose the new regulation and replace the previous one by mid-2022. The new regulation will be designed in a way to bring stability to the volatile cryptocurrency market, without damaging innovation and development within the sector.
Back in 2019, the FSA revised a similar law that mandated cryptocurrency providers to implement new features for the protection of end-user assets. This decision came into effect as a result of a USD 32 million loss incurred by the Japan-based crypto exchange, Bitpoint, after a massive hack.
After the recent hack of the Liquid crypto exchange, the FSA also added that cryptocurrency operators in the country are yet to implement adequate Anti-Money Laundering (AML) procedures and price volatility measures.
Earlier this month, the financial regulator announced to mandate the FATF’s Travel Rule by 2022, requiring all crypto providers to share transaction data. This rule will be imposed as a preventive measure against financial crimes such as money laundering and terrorist financing in the cryptocurrency sector.
The drive will be supported by the Japanese Virtual Currency Exchange Association “to establish a necessary system” to accurately implement that travel rule.
Suggested Read: Japan: FSA Sets a Firm Deadline For FI to Ensure Full AML/CFT Compliance
