Japan’s Financial Services Agency
(FSA) has solidified its position regarding applying the Financial Instruments
and Exchange Act to the collection of investment funds in cryptocurrency,
according to a January 8 report by the Sankei Shimbun, a major Japanese
newspaper.
The Financial Instruments and
Exchange Act prohibits unregistered companies from soliciting investment funds
in cash, however there is no mention of cryptocurrency. The issue with this
status quo was brought to light in Japan with events such as the 2018 fraud
case against investment company Sener, which solicited investment funds
promising monthly returns of 3-20%, with an unauthorized collection of
approximately 8.3 billion Japanese yen worth of cryptocurrency.
The FSA pointed out in October 2017
that investment financing that uses cryptocurrency could become subject to the
Financial Instruments and Exchange Act and other regulations. The agency also
held regular discussions with industry experts throughout 2018 regarding
cryptocurrency regulation, offering the opinion at these meetings that
cryptocurrency should be taken up as marketable securities (like stocks) under
disclosure regulations in terms of illicit activities through cryptocurrency
and fund procurement. While cryptocurrency regulations are specified in the
Payment Services Act in Japan at present, the law did not cover items such as
market manipulation or fund procurement.
Although there are increased
hurdles foreseen for fundraising through initial coin offerings for start-ups’
market entry in Japan in the future, investor safeguards are also expected due
to further clarifications in relevant regulations for fraudulent fund procurement.
Bloomberg reported on January 7
that the FSA is investigating the degree of interest in cryptocurrency ETFs in
the finance world and whether they should be approved. Last year, the agency
adopted a dismissive posture on bitcoin futures and Ethereum options, stating
that it was difficult to acknowledge a clear “social significance” for the
instruments. However, according to Bloomberg’s
anonymous source, it is highly possible that the FSA investigation’s
conclusions on ETFs will be submitted by Japan’s Liberal Democratic Party
in March this year. The conclusions are considered to be used as guidance for
legislation related to cryptocurrency.
There is also a possibility that
many important law reforms will take place in Japan in 2019, including whether
the term “crypto currency” will be redefined as “crypto asset.”
*This article was written by Fisco
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Published at Thu, 10 Jan 2019 08:22:33 +0000
