Japan’s Financial Services Agency Shares Plans to Regulate Cryptocurrency Wallet Services
A spokesperson for the Japanese FSA (the Financial Services Agency) recently unveiled a plan wherein the regulatory body seeks to gain more control over the way in which cryptocurrency wallet providers carry out their day-to-day operations.
However, it is worth noting that at the time of writing this article, these measures have not yet been implemented.
The Nitty-Gritty Of The Plan
Before we get into the details of what the FSA has proposed, it is worth noting that the regulatory body recently concluded it its ninth annual cryptocurrency study group meeting.
As per the findings of the group, one of the primary aspects of concern for the FSA is the way in which the crypto wallet industry functions at the moment (mainly because the sector is still unregulated to a large degree).
In this regard, the study pointed out that:
“Wallets are like bank accounts that store virtual currencies. While wallet service providers handle large amounts of virtual currencies like exchange companies they are not targeted by laws and regulations.”
Also worth mentioning is the way in which Japan’s fund settlement law currently requires businesses dealing with cryptocurrencies to register with the FSA before initiating any buying/selling related activities.
More On The Matter
On this latest issue, a spokesperson for the FSA went on to say that the current scope of Japanese legislation does not apply to wallet service providers— primarily because they don't deal directly in the buying/selling of crypto assets. However, since these entities do deal with volume/bulk payments, the FSA believes that they too should be subject to the existing financial regulations that other businesses have to deal with.
As per the plan, only crypto wallet providers (not the developers) will be subject to the new rules (particularly since many wallets exist only as code).
Last but not least, it is worth noting that along with the regulatory aspect of things, the FSA also discussed the various risks currently associated with wallet services (these include stolen funds during cyber attacks, wallet failures, money laundering, and other risks shared by crypto exchanges).
While an exact date for the implementation of the above rules have not yet been received, a transition period for ushering in such regulations has been outlined by the FSA. During this period, wallet operators will not be able to add new businesses, customers, or coins to their respective platforms. Not only that, they also have to post notices regarding their ‘registration status’ on their official websites (failing which the businesses in question will be shut down immediately).