It was reported this week that Japan’s Financial Services Agency is looking to regulate cryptocurrency exchanges under a different law, but there seems to be some contention about whether that’s true.
UPDATED | July 6, 2018:
Japanese outlet CryptoWatch reported that a source from the FSA has denied claims the agency is considering regulating virtual currency exchanges under the Financial Instruments and Exchange Act. The article quotes an unnamed source from the agency as saying, “There is no such fact.”
The FSA has not released any announcements on its website confirming or denying the claims.
ORIGINAL | July 3, 2018:
Local Japanese daily Sankei Shimbun reported on Tuesday that the Financial Services Agency (FSA), Japan’s financial regulator, is considering a shift in cryptocurrency regulation. Instead of following the Payment Services Act, the FSA would regulate crypto exchanges via the Financial Instruments and Exchange Act (FIEA). The FIEA would provide exchange customers with stronger protections, such as a stringent investor protection system that prevents insider stock trading. Additionally, the FIEA requires securities companies to separately manage corporate and customer assets.
If cryptocurrency is treated as a financial product rather than electronic money, which the Payment Services Act currently stipulates, investors may be able to pursue other derivatives of the digital assets, like exchange-traded funds.
News of this potential shift in regulation comes as the FSA reviews findings from its Study Group on Virtual Currency Exchange Industry, which investigated regulatory matters and problems within existing laws as they relate to cryptocurrency exchanges.
The regulatory shift was prompted in part by the January 26 Coincheck hack. In response to the event, the FSA began conducting surprise inspections of exchanges earlier this year, and it ordered two exchanges, Eternal Link and FSHO, to cease operations in April. Last week, CEOs of two Japan Virtual Currency Exchange Association exchanges resigned from their positions as chairs of the association after receiving business improvement orders from the FSA. Stronger consumer protections and a broader law, such as the FIEA, fall in line with the FSA’s recent actions to crack down on crypto fraud and other criminal activity.
Daniel Putney is a full-time writer for ETHNews. He received his bachelor’s degree in English writing from the University of Nevada, Reno, where he also studied journalism and queer theory. In his free time, he writes poetry, plays the piano, and fangirls over fictional characters. He lives with his partner, three dogs, and two cats in the middle of nowhere, Nevada.
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Source: ETHNews