After its initial regulation framework, Japan is all set to revamp it to control the speculative investments that are happening in the cryptocurrency ecosystem. Cryptocurrency investments in Japan were declared as a legal tender in April 2017 by the Financial Services Agency (FSA).
As the primary regulatory body, FSA regulates all the legal proceedings for the economy of Japan. In 2017, authorities modified the Payment Services Act to legalize cryptocurrency, requiring exchanges to register their entities and obtain an operating license. The license will be valid only for the cryptocurrency trade in Japan.
To begin with, the authorities enforced the regulation early to guide the cryptocurrency investment revolution in Japan, aiming to control payments and remittances. At the time, the Financial Services Agency (FSA) sought to prevent unlawful activities from operating under the anonymous and private cryptocurrency umbrella. However, the landscape has evolved significantly. As a result, the regulatory framework is now undergoing revision to rein in the speculative investments increasingly associated with cryptocurrencies like Bitcoin.
Earlier FSA developed the framework for a regulated payment channel of cryptocurrencies, but as the landscape started moving more towards investment, it is altering the structure for speculative investments too. As per the higher officials of FSA, the changes will shake up the existing scenario as per the tweaks, the Financial Instruments and Exchange Act (FIEA) will be affecting the cryptocurrencies also according to which the exchanges need to demark the customer funds from the exchange assets so that the investor remains protected.
Strengthening Investor Protection Through Revised Regulations
The speculative investments are seeing regulation from the domestic cryptocurrency investments in Japan on the exchanges also. Japan’s Virtual Currency Exchange Association (JVCEA), a regulatory body founded by 16 licensed crypto exchanges, is pushing to control margin trading to reduce investors’ risk of losses. Currently, speculative trading remains unchecked, and the FSA opposes allowing this to continue.
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