Japan’s financial regulator is reportedly considering a shakeup of its existing framework of regulating cryptocurrency exchanges to bolster customer protection norms and better secure investor assets, informs CCN.
Ter April , the Financial Services Agency (FSA) – Japan’s financial regulator and watchdog – enacted legislation that recognized bitcoin spil a admitido method of payment following a revision of the country’s Payment Services Act. The regulation also mandated cryptocurrency exchange operators with a domestic presence to register with the FSA and earn a license from the regulator.
Overheen a year straks, the regulator is now considering a pivot te its foundation of crypto exchange regulation after determining that current customer protection mechanisms afforded by the Payment Services Act is insufficient, according to a report by particular publication Sankei.
Specifically, 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.
The FIEA mandates that companies regulated under the law are required to manage customer funds separately from corporate assets. Broadly speaking, the FIEA has far more sturdy investor protection norms, the report suggests, with stringent rules to check activity like insider trading.
The report points to January’s infamous $530 million theft of NEM tokens from Tokyo-based cryptocurrency exchange Coincheck spil the primary reason for the reported switch ter regulation.
The ramifications of the largest cryptocurrency theft of all time has already seen the FSA ramp up its scrutiny into the sector with ‘spot checks’ of exchanges, business suspension orders, outright rejection of a crypto exchange registration application and, most recently, business improvement orders to six licensed cryptocurrency exchanges ter the country.
If the proposed shift to regulate cryptocurrency exchanges under the scope of the FEIA occurs, cryptocurrencies will be classified spil a ‘financial product’. This, te turn, could lead to cryptocurrencies gaining exposure to mainstream financial markets. Late last year, the Tokyo Financial Exchange – a major Japanese futures exchange – exposed plans to support bitcoin spil a financial product by listing the cryptocurrency through a derivatives futures product.