It seems Japan regulator FSA is following the path of global financial watchdogs in bid to keep close eye on Bitcoin operations. As boosting the role, it starts Japanese Bitcoin exchanges surveillance.
26 September, AtoZForex – The Financial Services Agency (FSA) will put Japanese bitcoin exchanges under “full surveillance” from October. Japanese financial watchdog will increase its scrutiny of digital currency exchanges by looking into their internal systems including customers’ assets. The observation will also authorize the watchdog to carry out ‘on-site’ inspections of bitcoin exchanges.
Why FSA starts Japanese Bitcoin exchanges surveillance?
The plan comes in the months following Japan’s legal classification of bitcoin as a recognized method of payment. As reported in March 2016, the Japanese cabinet passed bills to recognize digital currencies as the digital equivalent of money. Those bills came to pass in April when bitcoin was classified as a legal method of payment. In July, the officials officially put an end to the 8 percent consumption tax rate on bitcoin transactions through exchanges.
A report cites the FSA executive as stating:
We pursue both market fostering and regulation enforcement…We aim for sound market development.
Bitcoin’s status as a form of legal tender coincides with revised payment services law in April. However, the law mandated a number of requirements and standards for exchanges in Japan. The rise in popularity and adoption of bitcoin in the country enforcing regulator to provide guidelines. Also the regulator keeps close eye on fake brokers to stop conducting services in the country, Japan FSA blacklist includes two FX firms.
How can Bitcoin exchanges operate its services?
Under the new rules, Japanese exchanges require registration with the FSA before the September under the revised payment services law. The FSA has also established a 30-member team specifically to carry out surveillance of virtual currency exchanges in the country. Private companies which run exchanges can buy and sell virtual currencies . However, there are more than 20 such exchanges in Japan. The team is checking whether virtual currency exchanges manage customer assets separately from their own assets and whether they have appropriate risk management measures, including how to respond to cyberattacks, in place.
Among major virtual currencies, bitcoin has seen its price seesaw, soaring four to five times from the start of the year before taking a sharp downturn. Despite Bitcoin under pressure following China crack down, Bitcoin prices surge ahead Bitcoin Cash fork, BCC futures plunge. Some companies have raised funds using such currencies in so-called initial coin offerings. But there have been cases in which the novel fundraising method was abused by fraudsters. As reported in July, the oversight and scrutiny by Japanese authorities was to be expected so as to avoid any scenario of a Mt Gox-like collapse in the country.
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