The Financial Services Agency has finally commented on media reports insinuating that it has started taking steps to revise the regulations governing cryptocurrency exchanges in Japan. The financial regulator has been the subject of constant criticisms for its inadequate crypto-exchange registration procedures following the agency’s issuance of orders for business improvements to exchanges it previously granted its approval.
FSA Labels Reports Untrue
Earlier this week, a media outlet reported that the FSA was considering revising its regulations on cryptocurrency exchanges in Japan such that the Financial Instruments and Exchange Act would begin to regulate cryptocurrency exchanges. The effect of this would be to give cryptocurrency the status of a financial product while also imposing a requirement on companies to keep customers’ funds separate from the companies assets. The FIEA also prohibits insider tradings.
A news agency, Impress Corporation, reported the FSA’s response to claims of the different media outlets as the Agency stated that it wasn’t true. According to the FSA, if such considerations existed, the Agency would address it as a study group agenda, but nothing of such had been discussed in its previous meetings. The Agency further emphasized that anything which wasn’t included on the Agenda was not up for consideration.
It was reported that the agency organised regular research meetings and had in attendance financial practitioners , academic experts, institutional members and other persons to address the problems existing in the crypto sphere.
Some professionals have, however, expressed scepticism about the news source. Ken Kawai, a partner at Anderson Mori & Tomotsune law firm, while speaking to a news outlet, stated that the overhauling would likely occur later even if not now. However, he added that other derivatives such as swaps, options, futures and CFD would likely be regulated earlier by the FIEA.
Inadequacy of Existing Regulations
Sources reported that the law on the revised fund settlement became operative in April 2017. The law fully legalized cryptocurrency as a valid legal tender, while also stipulating requirements for registration of crypto exchanges with the FSA. Till date, sources claimed that the FSA had approved the registration of 16 crypto exchanges.
Following the Coincheck hack in January, FSA worked with stricter measures and found that the internal systems of about 16 licenses crypto exchanges were grossly inadequate. The FSA in March issued out business improvement orders to Tech Bureau and GMO coin.
Further, it was reported that the FSA issued other business improvement orders on June 22 to additional exchanges including Btcbox, Tech Bureau, Bitpoint Japan, Bitbank, Quoine and Bitflyer which is reportedly the largest crypto exchange in Japan by volume. The FSA was criticized following the issuance of those orders.
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