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Japan’s Regulator Swamped With Exchange Applications as New Year Approaches

Japan's Regulator Swamped with Exchange Applications as New Year Approaches

Japan’s financial regulator, the Financial Services Agency (FSA) is reported to have received 190 cryptocurrency license applications from exchanges as 2019 approaches.

This happened after the FSA recently granted the newly formed Japan Virtual Currency Exchange Association (JVCEA) in Japan the power to oversee self-regulation within the cryptocurrency industry.

The JVCEA had already applied to the FSA to become cryptocurrency’s one and only self-regulatory body in the country. It also attempted to stem the tide of transactions earlier this year when it recommended its own “appropriate regulations” for growth by proposing new rules that would affect the way exchanges operate, placing privacy coin listings and insider trading under the regulatory microscope.

Another tool for limiting the transaction surge suggested by JVCEA was to enforce trading caps and restrictions according to age group, i.e. the very old and the very young. The FSA regulator has already released figures showing that in April, there were 142,000 crypto traders in Japan. That monthly figure represents a small percentage of the total of 3 million Japanese traders.

Last month, FSA’s Study Group on Virtual Currency Exchange Industry concluded its tenth meeting. The group classified tokens according to three categories: virtual currencies with no issuers (like Bitcoin), virtual currencies with issuers, and virtual currencies that not only have issuers but also distribute profits.

The country’s top financial regulator Toshihide Endo has suggested that the industry needs to grow under “appropriate regulation” and as such won’t need government intervention to further enforce curbs on how exchanges operate within the country.

The FSA commented last week that:

“We think it necessary to work with the JVCEA closely so that the association can successfully perform self-regulatory functions through the establishment and application of self-regulatory rules and monitoring of their members.”

Japan is currently the global leader in the market development of cryptocurrencies, although, in terms of public adoption, many Japanese have suggested that the prices of cryptocurrencies must become far more stable in 2019 for people to use them for regular purchases throughout all sectors across the country.

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Japan Releases New Draft Crypto Regulations to Safeguard Investors

Japan Releases New Draft Crypto Regulations to Safeguard Investors

Japan’s Financial Services Agency (FSA) responsible for regulation has published a report outlining its proposals for changes to the current rules which govern cryptocurrency exchanges.

The main purpose of the updated rules is primarily aimed at addressing hacking incidents, self-regulation, deemed dealers, privacy coins, and margin trading. The framework, which also targets ICOs, was established after 11 meetings of the FSA study group.

Last month, FSA’s Study Group on Virtual Currency Exchange Industry concluded its tenth meeting. The group classified tokens according to three categories: virtual currencies with no issuers (like Bitcoin), virtual currencies with issuers, and virtual currencies that not only have issuers but also distribute profits.

According to the FSA, no major barriers prevent the new regulation becoming law and the heightened focus on cryptocurrency by the agency is thought to be a result of highly publicized hackings earlier in the year. The new laws are aimed at preventing such incidents by strengthening the management of customer property to safeguard investors.

New regulations will demand that exchanges have net assets “equal to or more than the amount equivalent to the currency and repayment funds” and also outline measures which cryptocurrency exchanges can employ to safeguard against bankruptcy.

Japan has been developing strict measures to safeguard the space since cryptocurrency began to gain huge popularity in the country. In October, industry self-regulators, the Japan Virtual Currency Exchange Association (JVCEA), were approved by the FSA to be officially recognized in its regulatory position.

Under the new regulations, Japan will refuse registration to those companies who neither “join the accredited association and conform to the self-regulation” nor establish self-regulation. There are currently “three deemed dealers” awaiting approval: Coincheck, Lastroots and Everybody’s Bitcoin.

Such companies are not permitted to advertise aggressively and expand their business while waiting for approval, nor are they able to acquire new customers during this period. Deemed dealers are also required to post their registration status on their websites to clarify their trading status for customers and potential clients.

The report also noted that ICOs “can be subject to the securities regulation” under the Financial Instruments and Exchange Act or the Fund Settlement Act.

 

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Japanese Police Investigate 700% Increase in Suspicious Crypto Activity

Japanese Police Investigate 700% Increase in Suspicious Crypto Activity

Japan’s National Police Agency (NPA) has announced a huge hike in reports of dubious cryptocurrency transactions, most which occurred between January and October of this year.

In all, 5,944 reports from cryptocurrency exchanges were recorded, possibly linked to money laundering and tax evasion. These figures represent an eight-fold increase from the 699 cases reported in 2017.

Japan has the world’s most progressive regulatory climate for cryptocurrencies with a buoyant and energetic market. Its regulator has tightened regulation om trading and exchanges over time in order to provide a secure business environment and now requires all cryptocurrency exchanges to be screened and registered by the Financial Services Agency (FSA). In 2017, this vigilance was stepped up by the FSA also requiring a form of mandatory reporting expecting exchanges to report any suspect trading activity to the regulator.

These laws appear to have done little to prevent an escalation in cases of illegal activity, although they are at least now being brought into the public light. An NPA official commented, “It’s already been some time since the reporting system began, and it has been embraced by the industry through guidance from the Financial Services Agency.”

The cost of this crime, however, is alarming, with the JPY 660 million stolen from crypto exchanges and individual wallets swelling to a huge JPY 60 billion in only the first half of 2018.

Just this week, the National Safety Commission released its latest report on the state of the industry with regards to the misuse of cryptocurrency funds, a factor that many nations’ leaders cite as being the main deterrent towards civic adoption by central governments and banking institutions.

The main areas of misuse thrown up by the report include factors such as reuse of the same face photo by several users with different names and birth dates, multiple trading accounts initiated from a single IP address, logins from overseas on accounts with Japan addresses, as well as registration of out-of-use mobile phone numbers.

But FSA registrations continue, with 16 recent exchanges passing the screening process and another three awaiting the green light to operate, highlighting that the FSA feels that it has this situation under control.

 

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Japan to Regulate Crypto Wallet Services

Japan’s Financial Services Agency (FSA) is planning to impose regulations on cryptocurrency wallet service providers, according to a published account of its latest meeting.

The agency gathered earlier this week for its ninth cryptocurrency study group meeting. The FSA also hosts regular study group meetings to discuss various crypto regulatory issues, particularly those concerning the regulation of cryptocurrency exchanges.

A major topic of its last meeting was a plan to regulate wallet service providers, given that currently, FSA regulations are not applicable to such services as such providers are not in the business of actually trading. The agency now feels that because such providers manage transfers and storage of digital currencies, they should be brought in line with financial regulation.

It was revealed that any new regulations would not apply to wallet software developers and hardware wallet manufacturers as these are often simply coded private facilities with no company backing.

The focus is again on money laundering and as such, Financial Action Task Force (FATF) regulations will become the basis for the new regulations according to the FSA. The FATF is an intergovernmental organization that designs and promotes policies and standards to combat financial crime. Recommendations created by the task force target money laundering, terrorist financing, and other threats to the global financial system.

Other issues discussed in this ninth meeting of the cryptocurrency study group around the topic of wallet services touched on stolen funds during cyber-attacks, wallet failures, money laundering, and other risks shared by crypto exchanges.

The FSA is continually updating its cryptocurrency regulations. At this last meeting, further measures to regulate the industry were discussed, such as financial audits and the separate management of funds belonging to service providers and customers. Also, it was suggested that during a transition period for introducing new wallet regulations service providers would not be able to add new businesses, customers, or coins supported by the wallet.

 

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Ready Steady Go: On Your Marks for the Stablecoin Steeple Chase

With Japanese regulators confirming that stablecoins do not fit the definition of cryptocurrencies outlined in the country’s Payment Services Act, the stablecoin chase seems well and truly on in that country and, so it appears, everywhere else.

As Bitcoin News reported yesterday, according to the FSA, firms issuing stablecoins in Japan need not register for licenses, though they may need to register for issuing payment instruments. Significantly, this clarification of the FSA’s 2017 guidelines means that large stablecoin transactions, up to JPY 1 million (around USD 9,000) can be made unhindered by the same guidelines which apply to other transactions.

A stablecoin is a cryptocurrency pegged against something of widely-accepted value such as a state currency, typically the US dollar, giving it price-stable characteristics. It is seen by some as a safe hedge against the volatility of conventional cryptocurrencies such as Bitcoin or Ethereum. Currently, they are underutilized apart from traders using them to guard their positions during bear markets.

What is the current state of play in the apparent rush towards stablecoins? There seems to be no stopping the charge as the London Block Exchange (LBX) announced its plans to launch the LBXPeg,