Japan’s Financial Services Agency (FSA) is considering revising the existing regulations on domestic cryptocurrency exchanges, CoinTelegraph reported referring to a report from Sankei.
The major hack on Japanese cryptocurrency exchange Coincheck earlier this year seems to be the reason which has compelled the regulator to revisit the existing laws. The FSA is reportedly considering changing the legal basis of current regulations in order to enhance customer protections.
Japan revised its Payment Services Act, which went into effect in April 2017. The law legally recognizes cryptocurrencies as a form of payment and also requires any cryptocurrency exchange intending to do business in the country or solicit its citizens to register with the FSA.
According to the report, the FSA is considering bringing cryptocurrency exchange regulations under the Financial Instruments and Exchange Act (FIEA).
Under the FIEA, securities companies are required to manage customer funds and securities separately from corporate assets. If implemented, it would treat cryptocurrencies as “financial product.” It would also open the doors for the introduction of crypto derivatives such as exchange-traded funds (ETF).
Earlier this year, 16 Japanese government-registered cryptocurrency exchanges teamed up to set up a self-regulatory body. Recent reports suggested that the Virtual Currency Exchange Association (JVCEA), established in April 2018, will be releasing new guidelines for cryptocurrency exchanges.
