Japan’s financial regulator, the Financial Services Agency (FSA), says it would like the cryptocurrency industry to grow “under appropriate regulation”.
In an interview with Reuters, FSA Commissioner Toshihide Endo claims the regulator has no intention to curb the crypto industry excessively. Instead, it is trying to strike a balance between protecting consumers and promoting technological innovation.
Last year, Japan became the first country to regulate cryptocurrency exchanges. The FSA started clamping down on the industry following the $530 million (£411.5 million) theft of digital money from Tokyo-based Coincheck in January.
A series of FSA inspections uncovered poor management and a lack of basic internal controls at several exchanges. As a result, some exchanges were ordered to temporarily suspend operations.
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The FSA is also thought to be refining its regulatory framework around cryptocurrency exchanges in order to boost consumer protection and better secure investor assets. It considers the current consumer protection mechanisms afford by the Payment Services Act to be insufficient, according to local publication Sankei.
The review could see crypto exchanges being brought into the realm of Japan’s Financial Instruments and Exchange Act, which requires traditional securities firms and stock brokerages to manage customer funds and securities separately from corporate assets. This shift could result in cryptocurrencies being classified as a financial product, giving them exposure to mainstream financial markets.
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