Japan’s Financial Services Agency (FSA) is planning to impose stricter regulations on cryptocurrencies, The Japan Times said in a new report.
The regulator is considering stricter rules in order to curb the use of cryptocurrencies for speculative investments.
Last year, Japan revised its Payment Services Act, which went into effect in April 2017. Assuming wider use of cryptocurrencies for payments and remittances in the future, the law legally recognized cryptocurrencies as a form of payment.
However, contrary to the expectations, the use of cryptos is growing more rapidly towards speculative investments as well as corporate fundraising activities.
An exchange official told the media outlet that the rapid growth of crypto investments can be attributed to the expansion of margin trading. The official explained that while foreign exchange margin trading is capped by 25 times leverage limit, no such cap exists on crypto margin trading, allowing crypto investors to experience wild financial swings.
An FSA official highlighted that as cryptocurrencies are beyond the scope of the Financial Instruments and Exchange Act, trading in them is “unchecked.”
Moreover, the major hack at Tokyo-based crypto exchange Coincheck exposed the shortcomings in the management of customer assets by exchange operators.
According to the report, the FSA set up an expert panel in April to explore ways in which they can bridge the gaps between regulations and actual practice for cryptocurrencies.
Recent reports suggested that the FSA was considering changing the legal basis of existing crypto regulations. However, the regulator refuted the reports saying that “there was no such fact.”
