Japan’s Financial Services Agency to Seek Speculative Crypto Investments with New Rules in Place


Japan's financial regulators will be targeting speculative cryptocurrency investors in new regulatory measures for cryptocurrency in the country. There has been broad adoption of cryptocurrency in Japan more than most countries in the world, which has seen cryptocurrency accepted by the financial regulators as a legal tender for a transaction. The previous law did not put the speculative investors into consideration, which the new regulations to be made is now focused on.

The Need For New Regulations For Speculative Investors

Japanese financial regulators are set for the adoption of new financial regulations for speculative investors of cryptocurrency. The financial regulators had previously in last year April accepted cryptocurrency as a legal tender for transactions. They have also placed a mandate on local exchanges to get registered and earn their license to operate from the financial regulators.

The enforcement and revision of new legislation in April 2017 was to aid the full acceptance and usage of cryptocurrency. At the period, Bitcoin's value was ¥200,000, but the surge in price afterward saw it rise to above the rate of ¥2 million ($17,700) in December 2017. During the period of the bullish move in trend, there was a massive increase in the investment of Bitcoin for speculative reason than previously used for conducting transactions.

The legislative law previously enforced only covers its usage as a legal tender for a transaction. This creates a vacuum for the need for new rules to protect the interest of the massive influx of investors for speculative reasons, which are mostly first-time investors.

Promulgating New Regulations For Speculative Investors

The 2017 digital currency regulatory law has targeted an increase in the usage of digital currency as a means of online payment purposely to make the financial institution relevant in its use for transactions.

However, the surge in speculative rather than a form of payment led to an advisory committee to be set up in April of this year to check into the situation. This is to avoid the case of Coincheck hacking that took place recently.

To tackle the situation, the new legislative law is seeking to put the cryptocurrency exchange sector under the supervision of Financial Instruments and Exchange Act (FIEA). This will give it the same features that the traditional stock brokerages and financial securities firms have. This feature will aid the management of customer funds separately from the corporate assets, which lead to an increase in investors.

Meanwhile, Japan Virtual Currency Exchange Association (JVCEA) is proposing its regulatory method for conducting transactions. This is a 4:1 limit on margin trading wherein investors will only be allowed to borrow up to four times their original deposit.

The new regulatory measure to cryptocurrency in Japan will bring digital currency trading and investment into same full stature with the traditional stock exchange.

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