It appears that the Japanese government is not planning any kind of harsh measures on digital currencies exchange in its jurisdiction but rather intends to grow the industry, this can be deduced from a recent description by Toshihide Endo, the commissioner of the Japanese Financial Service Agency (FSA), which is a major financial regulator in the country.
Endo revealed that the financial agency wants the cryptocurrency industry in Japan to “grow under appropriate regulation,” in an interview with Reuters dated August 22, 2018.
Regulating the Cryptocurrency Sector
While speaking on the publication, the commissioner of Japan’s FSA stated that the agency’s targets for building the cryptocurrency industry as one that seeks a “balance” between consumer protection and the blockchain technological innovation, he further stated that:
“We have no intention to curb [the crypto industry] excessively. We would like to see it grow under appropriate regulation.”
The review might see cryptocurrency exchange platforms being brought into the jurisdiction of Japan’s financial instruments and Exchange Act. This move will require conventional securities firms and brokers to manage customer’s assets separately from the company’s assets. This revolutionary shift could bring about Cryptocurrencies being classified as a financial product, giving them exposure to the mainstream commercial market.
However, what “appropriate regulation” implies is not expressly stated, but it can be inferred by the country’s previous disposition to cryptocurrencies and the blockchain technology as a whole which relatively has been favorable. This is evident as cryptocurrency seems to be a very profitable investment for Japanese investors, as over a staggering sum of $331 million was allegedly raised through mining by 331 investors, which implies that about $1 million is going to each of these investors, a report by an analyst stated:
“If the rapid growth of the cryptocurrency sector in late 2017 is considered, 331 is a number that is simply too low to be true… a large portion of cryptocurrency investors probably did not declare their earnings to the government.”
Sometimes in May, the Mitsubishi UFJ Financial Group announced plans to launch its own digital currency, with the plans to trailing its MUFG in sectors of Japan in 2019. Also In July, the FSA revealed that it was considering changing the legal grounds for regulating crypto exchanges to oversight the Financial Instruments and Exchange Act (FIEA), instead of its current legal foundation which is the Payment Services Act which hasn’t be so effective over the years.
Earlier this month, it was reported that the FSA published the results of its on-site inspections of a number of cryptocurrency exchange operators, noting that in the reviews it gives “priority to investor protection.”