Japan’s Financial Services Agency (FSA) is reportedly considering revising the existing crypto regulations in the country to help secure investor’s assets.
The FSA would regulate crypto exchanges via the Financial Instruments and Exchange Act (FIEA). In order to operate, crypto exchanges must seek approval from the FSA and meet a specific requirement. The FIEA requires securities firms to manage customer funds and securities, such as stocks, separately from corporate assets.
The FSA in April 2017 enacted a legislation that recognized bitcoin as a legal method of payment following a revision of the country’s Payment Services Act. The regulation also required crypto exchanges operators to register with the FSA and earn a license from the regulators.
The FSA is reportedly looking at bringing the cryptocurrency exchange sector under the purview of the Financial Instruments and Exchange Act (FIEA), to recognize and effect laws applicable to traditional securities firms and stock brokerages.
According to reports, the FIEA has far more robust investor protection norms, with strict rules to check activity like insider trading.
The regulatory shift was prompted in part by the January 26 Coincheck hack. In response to the event, the FSA began conducting surprise inspections of exchanges earlier this year.
Japanese authorities are optimistic about cryptocurrencies, we can only hope that this sentiment is reflected by their decision to change their current regulations. At the very least, they are ensuring a safer environment for investors and traders.