Japan’s FSA to regulate unregistered cryptocurrency investment firms
Financial Services Agency (FSA) is considering regulating the unregistered firms that request for investments in cryptos. This movie is possible to close a loophole in Japan’s existing regulatory system. In the existing framework, unregistered firms that collect funds in cryptocurrency instead of fiat currencies, remain in gray zone. It is because the unregistered firms do not explicitly come under Japan’s Financial Instruments and Exchange Act.
It prohibits unregistered companies to collect investment funds in cash, however, it doesn’t mention anything about virtual currencies, CoinTelegraph Japan reported.T his step became essential due to the current status of many such firms. In fact, last fall, reportedly, Tokyo police arrested eight men suspecting an operation of a pyramid scheme. Police, at that time, reportedly collected a total of 7.8 billion yen ($68.4 million) in cash as well as in cryptocurrency. They collected the money from around 6,000 investors.
One source told local daily news outlet Sankei that the operation was confined to funds in cryptocurrency. “There was a possibility that the scheme could not [have been] exposed,” the source added. The new regulatory provisions by FSA aims to prevent such instances in future.
Moreover, the history with the highest-profile cryptocurrency exchange hacks in the industry is quite high in Japan. In fact, it include Mt. Gox in 2014 and Coincheck in early 2018. After the latest Coincheck incident, FSA stepped up and intensified the scrutiny of the business practices of the cryptocurrency exchanges. It’s now mandatory to have an official exchange operating license.
Five cryptocurrency exchanges joined the Virtual Currency Exchange Association (JVCEA) of the country, earlier this month. It is a self-regulatory body formed in April 2018 in order to establish industry-wide investor safety standards.
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