Japan Introduces Guidelines To Legalize ICOsbr>
The Japanese government has proposed a new set of guidelines for the legalization of initial coin offerings (ICO).
The guidelines, which were drafted by a government-backed study group, include rules for identifying investors, preventing money laundering, tracking progress of projects, and protecting existing equity and debt holders. Japan’s Financial Services Agency (FSA) will deliberate on the proposal, which could eventually be made into law in a few years time.
“ICO is still in its infancy and has no industry practices yet,” the study group said. “Appropriate rules must be set to enable ICO to obtain public trust and to expand as a sound and reliable financing method.”
According to the guidelines, ICO issuers should define and disclose conditions for the provision of conveniences – such as services and rules on the distribution of procured funds, profits, as well as residual assets – to investors of tokens, shareholders, and debt holders. ICOs should also define and disclose a means for tracking the progress of white papers.
The group proposed that the regulations would apply to three types of ICOs: a venture company type, an ecosystem type for collaborative efforts with multiple corporations or government entities, and a large company type for in-house, high risk project funding.
“The ICO Business Research Group proposes the guidelines as the minimum principles that should be satisfied at this time,” the group said. “To enable ICOs to be used safely by a wide range of issuers and investors and to be accepted well in the society, more detailed rules may be required.”
The study group was led by Toshifumi Kokubun, a professor at Tama University in Tokyo. The group also included Yuzo Kano, head of the Japan’s largest bitcoin exchange bitFlyer, and members from the nation’s largest banks Mitsubishi UFJ Financial Group, Sumitomo Mitsui Financial Group and Mizuho Financial Group. The general adviser of the group, Takuya Hirai, is a member of the ruling Liberal Democratic Party, and one of the architects of a law legalizing crypto exchanges in Japan last year.