Japan Crypto Regulator States Easing of Restrictions Must Wait

Richard Marley
August 10, 2021
2 minutes read
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The Japanese financial regulator FSA is reluctant about easing regulatory requirements for the crypto industry given the increasing financial crime

The Financial Supervisory Authority (FSA) emphasised that cryptocurrency investing in Japan needs to be much more viable and streamlined as per state-of-the-art regulations.

Junichi Nakajima, the commissioner of FSA, in a statement mentioned that although he is open to potential benefits of digital assets like Bitcoin, he believes that they are still mostly used for speculation even though they are a quick means to send cash anywhere and anytime.

He further added that crypto transactions are used either to transfer money or to make investments. There is a wide array of challenges emerging from various businesses turning towards decentralised finance, better known as DeFi. He quotes,

“We need to consider carefully whether it is necessary to make it easier for the general public to invest in crypto assets”

When compared with the US where investors have numerous ways to invest in digital assets, investors in Japan face certain state restrictions. In this regard, the FSA has formulated a group of external officials who will carry out a study related to regulatory responses to decentralised finance. Nakajima is also looking to understand how investors perceive the crypto industry despite the regulations.

In 2017, he initiated the first-ever crypto regulatory framework for Japan comprising a registration requirement for virtual asset service providers (VASPs) and crypto exchanges. The massive data breach in 2018 at Coincheck, the Tokyo-based digital asset provider, led to stringent regulations after FSA determined a lack of customer security practices and internal controls.

Nakajima stated that the present crypto framework has been effective in ensuring anti-money laundering (AML) compliance and customer data and privacy protection, however, many among the 31 registered exchanges are facing challenges and the situation is “rather difficult”.

The fact that crypto does not comprise any underlying assets as financial stocks do makes them highly volatile, which is why the Japanese watchdog is reluctant about legalising crypto investment trusts.

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ASIC Expands its Team to Enhance Cryptocurrency Regulations
Australia’s financial regulator has enhanced the size of its crypto team. The crypto regulatory measures include their application for financial services licenses and show that specific crypto platforms have particular liquidity in reserve.

After shifting popular blockchain from a proof-of-work (PoW) to a proof-of-stake (PoS) system, ASIC, Australia’s financial regulator, has increased the size of its crypto team.

U.S. Security and Exchange Commission Chairman Gary Gensler stated that PoS-based tokens might be classified as securities.

The decision of ASIC to keep PoS tokens for example Ethereum, Cardano and Solana under its remit will further clarify the situation and enable crypto regulations to be more effective. To cope with the latest regulatory reforms, the crypto exchange must either delist the tokens or start complying with robust crypto laws.

Such moves may force a few crypto firms to manage their operating models. Even the largest stablecoin of the crypto market, Tether, has been caught in a controversy created over the failure of holding enough dollar reserves to back the stablecoin.

The crypto regulatory measures include their application for financial services licenses and show that these platforms have particular liquidity in reserve.

The final decision by the regulator has not been issued yet. Greg Yanco, the executive director for marketers, said that ASIC won’t be a “cheerleader for crypto assets.”

SEC Newgate carried out research the last November. It showed that 44% of Australian retail investors reported holding crypto. Out of these investors, only 20% viewed crypto as high-risk.

The chairperson of ASIC responded and said that the regulators were “concerned that there are limited protections for crypto-asset investments given they have become increasingly mainstream and are heavily advertised and promoted. There is a strong case for regulating crypto-assets to better protect investors.”

According to Yanco, until the last year, cryptocurrency was not such a high priority. Still, due to the decline of cryptocurrency in the previous few years and investors wiped out around the globe, ASIC expanded its team. It made crypto one of its “core strategic projects.”

Suggested Read: Regulatory Authorities to File a New Bill to Secure the Citizens from Cyber Criminal Activities

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Japan Crypto Regulator States Easing of Restrictions Must Wait

Forensic Document Verification – A New Standard

How Forensic Document Verification is Carried Out?

High-Profile Crime Cases of Document Fraud

Gang Arrested for Printing Fake Documents in Greece

Criminal Network Busted for Distributing Fake Documents

Regulatory Authorities Monitoring Document Fraud

Canada

Australia

Document Forgery Forensic Authentication – Ensuring KYC Compliance

What Shufti Pro Offers?

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Let’s prove your customer’s

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