Since the Coincheck theft and the Mt. Gox collapse, the Financial Services Agency (FSA) of Japan has been tightening their restrictions and making regulations clearer. To close a loophole found in the regulations, they may soon be regulating another part of the industry – unregistered investment firms that use cryptocurrency, rather than cash.
Sankei Shimbun released a report today, saying that there will be revisions coming that will require these types of actions to fall under the rules of the Financial Instruments and Exchange Act. Though it seems that their intention is to investigate and create the new regulatory stance quickly, there is no timeline. The gap found in the legislation is that unregistered firms cannot collect investments using fiat currency, but the rules do not mention cryptocurrency.
The watchdog has become increasingly interested in this issue as pyramid schemes involving crypto have started to rise in Japan. As recently as November, eight men were arrested for allegedly running one of these schemes in Tokyo, collecting 7.8 billion yen in cryptocurrency in the process. Most of the payments were made in Bitcoin, though another half-billion yen were in cash. These transactions occurred under a fake investment firm called Sener. Shimbun commented that the criminals might have remained under the radar if they had not used cryptocurrency.
Yesterday, the FSA was reportedly speaking on the possibility of making crypto exchange-traded funds (ETFs) available to the public. However, based on the belief that crypto derivatives would promote speculation on financial exchanges, their plan to approve those derivatives is no longer being pursued.
New regulations involving initial coin offerings (ICOs) are expected to be established, helping investors to avoid fraud. The regulations would require that ICO operators register the offerings with the watchdog first, and the tokens could be subjected to settlement regulation.