January 08, 2019 | AtoZ Markets- According to the news resources of January 8, the Japanese Financial Services Agency (FSA) is considering the issue of regulating the activities of unregistered firms that attract investments in cryptocurrency.
Recent FSA Activity on Crypto Market Regulations
Last year in August according to AtoZ Markets report, Japan’s financial regulator’s commissioner stated that the organization wants to contribute to the growth of the cryptocurrency market in regards to the regulatory matter. In June, the Minister of Finance Senator Fujimaki has asked the Deputy Prime Minister Taro Aso whether crypto transactions should be taxed through “separate settlement taxation,” instead of their current classification as “miscellaneous income. Later in July 2018, the Japanese financial regulator revealed its plans on looking into changing the legal basis for regulation of cryptocurrency exchanges. Such enthusiasm could imply that exchanges will feature stronger customer protection systems in the future. The same year in October, as was reported, the financial market regulator was mulling the limitation for crypto margin trading. FSA had plans to limit crypto margin traders’ borrowing power. In addition, the Japanese Financial Services Agency planned to limit the leverage available for trading in cryptocurrency margins to limit speculation and risks in the cryptocurrency market. According to the recent reports, the new FSA initiative is an attempt to close a loophole in the existing regulatory framework. At the moment Japanese unregistered firms that collect funds in cryptocurrencies, rather than fiat currencies, remain in the gray zone. Such firms are not subject to the Law of the Financial Instruments and Stock Exchanges of Japan, which prohibits unregistered companies from collecting investment funds in cash but does not mention funds raised in the form of cryptocurrency.
Recent Criminal Event Involving Crypto Boosted FSA Activity
According to the local reports, FSA incentive to review the current status of such firms was weakened last fall. At that time, Tokyo police arrested eight people suspected of using the pyramid scheme and reportedly collecting 7.8 billion yen (68.4 million US dollars), both in cash. and cryptocurrency from about 6000 investors in 44 prefectures, including Tokyo. The suspects were supposed to take a lot of investment in digital assets, rather than cash in an attempt to avoid regulating their unauthorized transactions. One source told the local daily newspaper that the whole operation was limited to cryptocurrency funds and that there is a possibility that “the scheme could not be disclosed.” The FSA revision of the existing rules is reportedly aimed at preventing the recurrence of such cases.
Country of the Rising Sun Has a Long Relationship With Cryptos
Japan has a rich history of cryptocurrencies and illegal activity it was involved, including famous illegal exchanges such as Mt. Gox and Coincheck. Since discovery of the latter in 2018, FSA has strengthened control over the crypto exchanges activity and strengthened the process of checking the risks of applicants to obtain their mandatory official license for the right to exchange. Recent FSA steps to clarify remaining ambiguities regarding cryptocurrency regulation include placing cryptocurrency in a new legal category in the stated “hope that traders will no longer buy them, believing that they are legal tender” recognized by the government. The FSA also intends to introduce initial coin offering (ICO) rules to protect investors from fraud. Under the new rules, ICO operators will have to request registration from the financial watchdog and develop a new token classification system that will allow calculations to be made for certain tokens.
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