Japanese Regulator Publish Draft of Proposed Domestic Cryptocurrency Regulations Framework

Japan’s regulator, Financial Services Agency has published a draft of new domestic cryptocurrency regulations framework. This comes one day after Hong Kong proposed new stricter rules to curb the risks associated with digital currencies such as money laundering.

Financial Services Agency (FSA) Proposed Cryptocurrency Regulations

The draft of proposed cryptocurrency regulations was published late last week, and its primary goal is to minimize the risks and ensure that all parties involved get value for money. The new framework will monitor and regulate initial coin offerings that are conducted in Japan as well as crypto services.

The report was compiled by a study group that was created by the agency last month to look into the strengths and weaknesses of Japan cryptocurrency market. The report contains several recommendations from the previous sessions held by the group.

As the primary financial regulator in Japan, FSA is required to submit bills and remain accountable to the country’s parliament. Another role of the agency is to supervise all financial activities conducted in the country. For example, all companies that seek to offer investment services and assets are required to apply and get the necessary accreditation from the agency before starting to render the services.

Most experts who have read the report are of the idea that it shows the Japanese government definitive stance on cryptocurrencies and blockchain technology. Most of the developed countries that have shown tremendous interest in the technology are yet to come up with such a framework.

One of the highlights of the report is that the Financial Services Agency report does recognize that technological innovation is not static. The agency is also aware of the importance of working cordially with other regulatory bodies that are authorized. It also goes an extra mile to encourage contributors to join the self-regulatory affiliation.

According to the report,involving qualified contributors to the regulations making process will ensure that the new rules do not cripple the industry. Their input in the process will also improve its financial services regulation capability.

It will be remembered that in October, the agency accredited Japan Digital Foreign Money. The primary objective of this decision was to effect self-regulatory laws in the primary legal regulations framework. The accreditation gave Japan Digital Foreign Money the means to create specific guidelines for domestic cryptocurrency exchanges.The guidelines include measures to combat insider trading and money laundering.

Restrictions on Transactions in Derivatives, Privacy Coin Listings, and Margin Trading

Financial Services Agency has also proposed strict restrictions on transactions in derivatives, margin trading, and privacy coin listings. As for initial coin offerings regulation,the agency states that specific tokens may be deemed subject to rules based on their structure. ICOs will also be under the Financial Instruments and Exchange Act.

On the issue of deemed dealers,the report recommends some regulatory measures. It establishes that the dealers should be given the permission or ability to increase their portfolio of coins until they register and get the necessary accreditation documents. The deemed dealers will also not be permitted to market their services or acquire new customers until they are duly registered.