Japan’s financial regulator, the Financial Services Agency (FSA), has started discussions around imposing stricter regulations for cryptocurrencies in an effort to provide better protection for investors.
Back in July, the FSA established a dedicated section, as well as a panel of financial experts to help the government oversee digital and decentralised finance.
According to the report, the government agency has already established a special department that should start overseeing digital and decentralised finance together with the specialised panel of experts.
It is understood the agency plans to draw up measures before next summer in order to ensure the stability of these new forms of finance in a way that does not hamper their development.
$32 million hack was a trigger
Back in 2019, the FSA revised a similar law on strengthening regulations on cryptocurrency exchange operators, mandating them to manage users’ assets in a safer way following a massive theft of digital currency.
This decision was directly connected to the hack of Bitpoint – a Japan-based crypto exchange that had a loss of $32 million.
However, the agency believes that operators have not taken sufficient measures against money laundering and price volatility.
Earlier this month, the FSA said that it will adopt the FATF’s Travel Rule by 2022, which will require all service providers dealing in cryptocurrencies to share their data.
The drive will be supported by the Japanese Virtual Currency Exchange Association in order “to establish a necessary system” to accurately implement that travel rule.
Recently, Japan’s FCA chief – Junichi Nakajima – said he believes crypto property like Bitcoin has the potential to profit the general public as a fast and low-cost technique to switch cash. Still, a lot of the crypto properties are at present used for hypothesis and alternative funding.
Disclaimer: The views and opinions expressed by the author should not be considered as financial advice. We do not give advice on financial products.