Japan’s chief financial regulator, the Financial Services Agency (FSA), will reportedly roll out a new set of regulations targeting initial coin offerings (ICOs) in the country. According to Japanese news outlet Jiji Press, the financial authority wants to impose new regulations to protect investors in the crypto space.
Citing the increased fraudulent activities relating to ICOs, FSA believes it is high time they took appropriate actions to provide order and protection for the public. In the proposed regulations, all businesses offering crypto-related services in the country will be required to register with FSA before starting operations.
FSA plans to submit the proposed bill in January 2019, during the ordinary parliamentary session. The proposed bill will seek to revise the financial instruments and exchange law as well as the payment services law, according to the report.
The Japanese FSA is not the only financial authorities to want regulations for the ICO space. In the recent months, the U.S. Securities and Exchange Commission (SEC) has been busy in trying to regulate ICOs. Though it has taken a conservative and traditional approach on ICO, U.S. securities regulator has made a milestone in shaping the ICO industry. Last month, authorities in Thailand also tightened its grip on ICO regulation to create order in the industry.
Different jurisdictions worry that if proper regulations are not set for ICOs, fraudulent activities will cause significant effects on the economy. They have a good reason to worry. According to a recent report by Diar, a cryptocurrency and blockchain research company, ICO fraudulent cases have raised $12 billion, twice more than what was reported in 2017.
In the report, Diar stated that the amount raised by the ICO does not justify their operations. The report also noted that most of the ICOs either get unlisted or they do not have the funds needed to stay in business. More than 60 percent tokens that completed their ICOs in 2017 and 2018, raising over $2.3 billion in the process, have yet to be listed on any exchange.
The report also noted that a good number of these ICOs have ended up being scams. ICO owners conduct an exit scam after collecting millions of dollars from unsuspecting investors. In the last two years, exit scams caused by ICOs amounted to $100 million.
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Japan’s chief financial regulator, the Financial Services Agency (FSA), has said that stablecoins are not virtual currencies under the definition provided in the Payment Services Act, in a statement that could have profound effects on how stablecoins are regulated in the country.
Cryptocurrency laws in Japan were overhauled back in April 2017 with revisions to the Payment Services Act and the Fund Settlement Law, effectively creating a new legal regime for cryptocurrency transactions and businesses.
In particular, cryptocurrencies are deemed to be a means of payment, and as a result, do not attract consumption tax. As such, there may be no obligation for firms issuing stablecoins to register for licenses, though they may need to register for issuing payment instruments.
In a statement to news.bitcoin.com, the FSA set out its position in relation to the status of stablecoins, saying, “In principle, stable coins pegged by legal currencies do not fall into the category of ‘virtual currencies’ based on the Payment Services Act.”
Instead, stablecoins were deemed to be a form of ‘prepaid payment instrument,’ which means a different set of regulations for companies issuing and facilitating stablecoin transactions, compared to those dealing in cryptocurrencies as legally defined.
“Generally speaking, companies need to register as the ‘Issuer of Prepaid Payment Instruments’ or the ‘Funds Transfer Service Providers’ based on Payment Services Act, when virtual currency broker dealers trade stable coins,” the regulator told the crypto news outlet.
The definition also means that transactions of up to JPY1 million, around $9,000, can be processed in stablecoins without the requirement for a banking license, allowing fund transfer services to operate up to that limit with a much lower compliance threshold.
According to the FSA, “When a person/an entity engages in exchange transactions of one million yen equivalent or less in the course of trade, registration as a funds transfer service provider is required. For exchange transactions exceeding one million yen, a license for banking business pursuant to the ‘Banking Act’ is required.”
Stablecoins, or fiat-pegged cryptocurrencies, are designed to tokenize fiat, through providing a price-stable cryptocurrency for transactions on chain.
The clarification from Japanese regulators will provide more certainty for those promoting stablecoins, at a time of increasing interest and development activity around stablecoin projects.
Note: Tokens on the Bitcoin Core (segwit) Chain are Referred to as BTC coins. Bitcoin Cash (BCH) is today the only Bitcoin implementation that follows Satoshi Nakamoto’s original whitepaper for Peer to Peer Electronic Cash. Bitcoin BCH is the only major public blockchain that maintains the original vision for Bitcoin as fast, frictionless, electronic cash.
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Japan continues to help shape the future of the cryptocurrency investment space. According to a report by Nikkei, the country’s Financial Services Agency (FSA) is preparing to introduce caps on the leverage possible for margin trading of cryptocurrencies. The move is designed to help control rampant speculation and risk.
Nikkei indicates that the FSA could introduce a cap that would be two to four times lower than an investor’s borrowing power. This would be a huge step for investors, as there are currently no regulations that cover crypto margin trading in the country. In many cases, exchanges have offered as much as 25 times the amount that is deposited. This is extremely dangerous, as well as counterproductive to crypto’s growth, as it means that a 4% drop in the target crypto’s value could completely eliminate the deposit.
Out of the 16 exchanges in Japan that are licensed by the FSA, seven offer margin trading, according to Nikkei. A panel recently created between FSA officials and financial and crypto experts is working to create regulations for margin trading.
Margin trading has seen exponential growth in Japan – to be expected if leverage is offered at 25 times a deposit. Last year, 80% of the crypto trading volume in the country was found in derivatives, accounting for $543 billion. Of this, 90% was led by margin trades.
The Japanese Virtual Currency Exchange Association (JVCEA), a body created by the 16 licensed exchanges in order to govern the crypto space, indicated that the margin trading cap should be set to as low as four times the amount of the deposit, but this was just a temporary step. JVCEA chairman and Money Partners Group president Taizen Okuyama, said at the time, “This is just a provisional measure – I don’t think a ratio of 4 is adequate.”
The JVCEA was just approved by the FSA to be a “certified fund settlement business association.” This designation gives the group the legal authority to create regulations for the country’s cryptocurrency exchanges, as well as to enforce them.
Japan is one of the few countries that has been proactively seeking ways to ensure that cryptocurrency and blockchains can mature in accordance with laws. While many countries have been reluctant to develop regulatory framework for the industry, Japan has dedicated a significant amount of time and resources to the subject in order to ensure Japanese investors are protected.
Note: Tokens on the Bitcoin Core (segwit) Chain are Referred to as BTC coins. Bitcoin Cash (BCH) is today the only Bitcoin implementation that follows Satoshi Nakamoto’s original whitepaper for Peer to Peer Electronic Cash. Bitcoin BCH is the only major public blockchain that maintains the original vision for Bitcoin as fast, frictionless, electronic cash.
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A cryptocurrency exchange association has been given the green light by regulators in Japan to become a self-regulating body for the sector.
On Wednesday, the Financial Services Agency (FSA) announced that the Japanese Virtual Currency Exchange Association (JVCEA) has been awarded the status of “certified fund settlement business association,” giving the body legal authority to shape regulation for cryptocurrency exchanges in the country.
The group will also be empowered to take action against any breaches, giving the body effective powers around both creating and enforcing regulations for the sector.
JVCEA has yet to confirm any of its prospective rules, but press reports have suggested these could include a requirement to hold separate deposits and government bonds, in a move designed to provide redress to customers in the event of hacks.
The association was formed in the aftermath of the Coincheck hack, one of the most high profile attacks on cryptocurrency exchanges in recent years, which cost up to $530 million. After the incident, the JVCEA filed an application with the FSA for approval in August, with Wednesday’s ruling finally granting them the legal authority to develop regulation around the sector.
The body is made up of 16 cryptocurrency exchanges, including Zaif—which itself fell victim to a $60 million hack earlier this year. As a result, Zaif had to sign over its business and assets to another company due to a lack of reserves to cover refund claims.
Previous suggestions to emerge from the body include limiting borrowing on margin, as well as developing a regime of regular inspections for cryptocurrency businesses.
Coinciding with the announcement today, the FSA has reported an increase in activity from firms applying for a cryptocurrency exchange license, and that it has updated the application process to take account of the growth in demand.
As a result, the review process has become significantly tighter, including questions about security, reserves and trading leverage ratios.
With the JVCEA now picking up much of the regulatory burden, it remains to be seen how this will shape the legal picture for crypto exchanges in Japan in future.
Note: Tokens on the Bitcoin Core (segwit) Chain are Referred to as BTC coins. Bitcoin Cash (BCH) is today the only Bitcoin implementation that follows Satoshi Nakamoto’s original whitepaper for Peer to Peer Electronic Cash. Bitcoin BCH is the only major public blockchain that maintains the original vision for Bitcoin as fast, frictionless, electronic cash.
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Japan is trying to take its cryptocurrency regulation to new heights. The Financial Services Agency (FSA), Japan’s top financial regulator, held its fifth cryptocurrency study group meeting on September 12, 2018, and revealed (in pdf) that, while 160 companies are waiting in line to enter the crypto space, three cryptocurrency operators are currently being reviewed.
At the meeting, the FSA revealed that the Japan Virtual Currency Exchange Association (JVCEA) already has plans for a self-regulatory body for cryptocurrency exchanges. Yasunori Okuyama, the president of the JVCEA, explained that their organization already has a list of self-regulatory rules that they are implementing. Yasunori, who is also the president of Money Partners, explained during the meeting that one of the rules involves notifying the JVCEA when handling a new virtual currency. This is because the association has a right to object to the integration of the new coin.
Also, the organization has other important rules which are focused on managing customer assets. One such rule introduces restrictions for margin trading using cryptocurrency, which was designed to help suppress the risk of loss for users. It also is meant to reduce the excessive speculative transactions that are usually used in leveraged virtual currency trading. Other regulation focuses on anti-money laundering (AML) laws, as well as basic guidelines and ethics for initial coin offerings (ICO) and trading.
The JVCEA currently has 16 members—Money Partners, Quoine, BitFlyer, Bitbank, SBI Virtual Currency, GMO Coin, Bittrade, Btcbox, Bitpoint Japan, DMM Bitcoin, Bitarg Exchange Tokyo, Bitgate, Bitocean, Fisco Virtual Currency, Tech Bureau and Xtheta. The FSA also revealed that out of the 16 companies that sent their applications for review, 12 withdrew their applications, one was rejected and only three survived.
The FSA is also seeking additional workforce, as the long list of applications cannot be covered by its existing staff. It explained that it currently has 30 personnel responsible for monitoring, reviewing and supervising crypto exchanges and traders. The agency’s document revealed that the FSA is making a request for 12 more personnel to be able to respond swiftly to cryptocurrency exchange operators in the 2019 fiscal year. Kiyotaka Sasaki, FSA’s vice-commissioner for policy coordination, said at the meeting, “The biggest problem is how to deal with new operators.”
Note: Tokens on the Bitcoin Core (segwit) Chain are Referred to as BTC coins. Bitcoin Cash (BCH) is today the only Bitcoin implementation that follows Satoshi Nakamoto’s original whitepaper for Peer to Peer Electronic Cash. Bitcoin BCH is the only major public blockchain that maintains the original vision for Bitcoin as fast, frictionless, electronic cash.
The post Japan’s FSA reveals crypto regulation update appeared first on Coingeek.
Japan is trying to take its cryptocurrency regulation to new heights. The Financial Services Agency (FSA), Japan’s top financial regulator, held its fifth cryptocurrency study group meeting on September 12, 2018, and revealed (in pdf) that, while 160 companies are waiting in line to enter the crypto space, three cryptocurrency operators are currently being reviewed.
At the meeting, the FSA revealed that the Japan Virtual Currency Exchange Association (JVCEA) already has plans for a self-regulatory body for cryptocurrency exchanges. Yasunori Okuyama, the president of the JVCEA, explained that their organization already has a list of self-regulatory rules that they are implementing. Yasunori, who is also the president of Money Partners, explained during the meeting that one of the rules involves notifying the JVCEA when handling a new virtual currency. This is because the association has a right to object to the integration of the new coin.
Also, the organization has other important rules which are focused on managing customer assets. One such rule introduces restrictions for margin trading using cryptocurrency, which was designed to help suppress the risk of loss for users. It also is meant to reduce the excessive speculative transactions that are usually used in leveraged virtual currency trading. Other regulation focuses on anti-money laundering (AML) laws, as well as basic guidelines and ethics for initial coin offerings (ICO) and trading.
The JVCEA currently has 16 members—Money Partners, Quoine, BitFlyer, Bitbank, SBI Virtual Currency, GMO Coin, Bittrade, Btcbox, Bitpoint Japan, DMM Bitcoin, Bitarg Exchange Tokyo, Bitgate, Bitocean, Fisco Virtual Currency, Tech Bureau and Xtheta. The FSA also revealed that out of the 16 companies that sent their applications for review, 12 withdrew their applications, one was rejected and only three survived.
The FSA is also seeking additional workforce, as the long list of applications cannot be covered by its existing staff. It explained that it currently has 30 personnel responsible for monitoring, reviewing and supervising crypto exchanges and traders. The agency’s document revealed that the FSA is making a request for 12 more personnel to be able to respond swiftly to cryptocurrency exchange operators in the 2019 fiscal year. Kiyotaka Sasaki, FSA’s vice-commissioner for policy coordination, said at the meeting, “The biggest problem is how to deal with new operators.”
Note: Tokens on the Bitcoin Core (segwit) Chain are Referred to as BTC coins. Bitcoin Cash (BCH) is today the only Bitcoin implementation that follows Satoshi Nakamoto’s original whitepaper for Peer to Peer Electronic Cash. Bitcoin BCH is the only major public blockchain that maintains the original vision for Bitcoin as fast, frictionless, electronic cash.
The post Japan’s FSA reveals crypto regulation update appeared first on Coingeek.
Japan’s Financial Services Agency (FSA) is making it tougher for cryptocurrency exchanges to register their businesses in the country, requiring disclosure of a lot more information than before, the Japan Times reported.
The regulator is requiring applicants to answer approximately 400 questions, from about 100 questions previously, during the screening process, as part of its efforts to keep customers’ money safe.
Among the added requirements for exchanges is to provide the FSA copies of minutes of board meetings, to ensure that sufficient discussions are held about a company’s financial management, and about database security. The FSA will also monitor a company’s list of shareholders, checking for, as the Japan Times phrased it, “links to antisocial groups.”
According to news.bitcoin.com, there are 160 companies looking to operate in Japan, but it remains to be seen how many will pursue their applications with the added requirements. At present, there are 16 exchanges licensed by the FSA. Another 16 are operating while their applications are pending review.
The stricter registration process comes after the January hacking of Coincheck, which lost a total of 523 million NEM tokens (XEM) worth $528 million at the time. This was larger than the 2014 Mt Gox hack where thieves took off with Bitcoins worth $480 million at the time. As early as March, Coincheck began the process of partially refunding those whose tokens were stolen.
Since the Coincheck hack, the FSA has conducted on-site inspections as a way to confirm information stated in applications. Such inspections revealed a lack of protection for users, in terms of manpower assigned to handle the large sums of money, and a skirting of anti-money laundering requirements. Some exchanges were suspended as a result. It was also found that records of minutes of the board were not kept properly.
The FSA has stated that it would allow the local cryptocurrency industry to grow, but “under appropriate regulation.”
Note: Tokens on the Bitcoin Core (segwit) Chain are Referred to as BTC coins. Bitcoin Cash (BCH) is today the only Bitcoin implementation that follows Satoshi Nakamoto’s original whitepaper for Peer to Peer Electronic Cash. Bitcoin BCH is the only major public blockchain that maintains the original vision for Bitcoin as fast, frictionless, electronic cash.
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