Japan’s Financial Services Agency (FSA) to Tighten Screws with New Crypto ICO Token Rules
Japan has often been considered a shining beacon of how to handle Coin regulations. They are generally considered strict yet fair in their setup. However, there has been a marked increase in dodgy and scam Initial Coin Offerings (ICO) in the last few years. In fact, it has been reported that in 2017 alone, up to two-thirds of all ICOs were less than honest.
In view of this new challenge, according to the Japanese news source, Jiji, it is expected that the Japanese financial regulator, the Financial Services Agency (FSA) will look to introduce better and stricter regulations to cover ICO. The FSA, charged with ensuring the financial stability of the nation, feels that new ideas are needed in order to better ensure the protection of investors who are increasingly susceptible to fraud. In a statement by a representative of the agency, it was stated that such an action was forthcoming and needed “in view of a number of possibly fraudulent ICO cases abroad.” This was done strictly “to limit individuals' investment in ICOs for better protecting them.”
How Will This Work
Sources have confirmed that a slew of requirements will be put in place to ensure more transparency and accountability. To begin with, all ICOs will be only through operators who are registered with the FSA. This will allow the government agency to better investigate and backtrack when any fraudulent activity is noticed.
There are also plans, by the agency, to request a revision of several laws dealing with the finer aspects of finance. There will be bills requesting a look at financial instruments, exchanges and payment services. It is expected that such a finalized report has already been given final touches and will be presented to the parliament in its January session.
All this has been done with due diligence carried out by the FSA. Their study group on Virtual Currency Exchange industry had been conducting regular meetings to discuss the various options before deciding on the best course of action. A key decision is that all tokens launched at ICOs will be classified as:
virtual currencies without the issuer
virtual currencies with issuer and
tokens with issuers that are also obliged to distribute revenues.
The group concluded that the first two set should be under the ambit of the settlement regulation of the Financial Instruments and Exchange Act. The last classification of ICO tokens should now be answerable under the investment regulations of the same law.
Many have always derided government interference in any walk of life. However, any move that brings a sense of stability and faith to an industry that is still finding its feet, should be welcome with open arms. If the new regulations are indeed able to meet their objective and make life harder for swindlers, it will be a major win for the industry.