Japan’s Financial Regulator To Change Crypto Regulationsbr>
Japan’s Financial Services Agency (FSA) is reportedly considering revising the existing crypto regulations in the country.
According to local news outlet Sankei, the Japanese regulator is considering bringing domestic crypto exchange regulations under the Financial Instruments and Exchange Act (FIEA), which would provide crypto exchange customers with stronger protections. The FIEA also requires securities firms to manage customer funds and securities, such as stocks, separately from corporate assets.
Under the current Payment Services Act, which went into effect in April 2017, cryptocurrencies are recognized as a form of payment and requires local exchanges to register with the FSA. Under the FEIA, cryptocurrencies will be treated as a financial product, which would open the doors for the introduction of crypto derivatives, such as exchange-traded funds (ETF).
The Coincheck hack in January of this year, in which the exchange lost over $400 million in XEM tokens, reportedly contributed to the regulator considering changing the legal basis on which cryptocurrencies are overseen in the country. Following the hack, the FSA ordered crypto exchanges to make significant improvements to their data security. The exchanges were also ordered to improve various other safeguards which were found to be insufficient.
Earlier this year, 16 crypto exchanges that are currently registered with the FSA formed a self-regulatory body, the JVCEA, in an effort to step up consumer protections and improve transparency. The JVCEA recently announced that it will be releasing new guidelines for member exchanges, including a ban on insider trading and trading of privacy-centric cryptocurrencies.