Japan’s FSA Starts Discussions to Impose Stricter Crypto Laws

Japan’s Financial Services Agency (FSA) has started to take steps to further strengthen the country's regulations around Cryptocurrencies Cryptocurrencies By using cryptography, virtual currencies, known as cryptocurrencies, are nearly counterfeit-proof digital currencies that are built on blockchain technology. Comprised of decentralized networks, blockchain technology is not overseen by a central authority.Therefore, cryptocurrencies function in a decentralized nature which theoretically makes them immune to government interference. The term, cryptocurrency derives from the origin of the encryption techniques that are employed to secure the netw By using cryptography, virtual currencies, known as cryptocurrencies, are nearly counterfeit-proof digital currencies that are built on blockchain technology. Comprised of decentralized networks, blockchain technology is not overseen by a central authority.Therefore, cryptocurrencies function in a decentralized nature which theoretically makes them immune to government interference. The term, cryptocurrency derives from the origin of the encryption techniques that are employed to secure the netw Read this Term, aiming to provide better protection to the local investors.

According to a report by local media outlet Jiji Press, the Japanese financial markets regulator has already initiated discussions and debates on the new crypto laws. It is intending to bring the new regulations around risky digital assets as early as summer next year.

The motive of the new laws would be to bring stability to the digital currency industry without hampering the development of crypto projects.

The latest update came after the regulatory agency already formed a dedicated section and a panel of experts last month to regulate the growing and complex decentralized finance sector. This came as the agency’s efforts to track developments in cryptocurrency and central bank digital currency initiatives.

Japan has always been a progressive country when it comes to crypto adoption and Regulation Regulation Like any other industry with a high net worth, the financial services industry is tightly regulated to help curb illicit behavior and manipulation. Each asset class has its own set of protocols put in place to combat their respective forms of abuse.In the foreign exchange space, regulation is assumed by authorities in multiple jurisdictions, though ultimately lacking a binding international order. Who are the Industry’s Leading Regulators?Regulators such as the UK’s Financial Conduct Authority ( Like any other industry with a high net worth, the financial services industry is tightly regulated to help curb illicit behavior and manipulation. Each asset class has its own set of protocols put in place to combat their respective forms of abuse.In the foreign exchange space, regulation is assumed by authorities in multiple jurisdictions, though ultimately lacking a binding international order. Who are the Industry’s Leading Regulators?Regulators such as the UK’s Financial Conduct Authority ( Read this Term. Some of the early crypto exchanges were established in this East Asian country and have led the market in Bitcoin trading for many years.

Hacks Led to Strict Rules

The Japanese crypto regulations underwent a major overhaul in 2019 after the massive attack on the country’s leading crypto exchange, Coincheck, resulting in the theft of more than $500 million worth of digital currencies.

To strengthen the exchange's security and protect the investors against any such attacks in the future, the FSA has strictly mandated the registration of all crypto trading platforms operating in the country. Despite the security requirements, the Japanese crypto exchange, Liquid was hacked recently when hackers stole around $80 million in cryptocurrencies.

Furthermore, the FSA has developed rules around the storage of client assets by the exchanges and is now bending towards adopting the Financial Action Task Force’s Travel Rule by 2022 that will mandate all crypto platforms to gather transaction data, ending anonymity in crypto.