Japanese financial regulator, the Financial Services Agency (FSA), has started discussions around imposing stricter regulations for cryptocurrencies in an effort to provide better protection to Japanese investors. Earlier, the FSA established a dedicated section and a panel of financial experts to help the government oversee digital and decentralized finance. Japanese financial regulator will also be responsible for keeping track of developments in cryptocurrencies and central bank digital currency (CBDC) initiatives.
FSA plans to impose the new crypto regulations by mid-2022.
The Japanese financial regulator intends to replace and impose the new crypto regulations by mid-2022. With the new regulations in place, the FSA hopes to bring stability to the crypto market while ensuring no damage to the development and innovation within the ecosystem. The FSA had revised a similar law that had effectively mandated crypto exchanges within Japan to implement new features for safeguarding the user’s assets. This decision was linked to the hack of the Japan-based crypto exchange Bitpoint that saw a loss of $32 million.
Operators within the country are yet to implement sufficient AML measures.
In addition to the recent hack of the Liquid crypto exchange, the FSA further believes that operators within the country are yet to implement sufficient Anti-Money Laundering and price volatility measures. Earlier, the FSA announced that it would adopt the FATF’s controversial Travel Rule by 2022, which will require all service providers dealing in cryptocurrencies to share transaction data. The Travel Rule was introduced in 2019 as a preventive measure against money laundering and terrorist financing with cryptocurrencies. The drive will be supported by the Japanese Virtual Currency Exchange Association “to establish a necessary system” to implement that travel rule accurately. Several financial regulators across countries are tightening crypto regulations.