The Japanese financial regulator is now considering introducing significantly stricter crypto rules. The new regulation is intended to offer investors from Japan better protection. Already in July, the FSA established a separate section as well as a panel of financial experts to support the government. The financial regulator intends to enforce the regulation by mid-2022. The recent case of the attack on the regulated Japanese crypto exchange Liquid Exchance shows the regulator that more regulation is still needed for security.
Financial regulator aims to enforce regulation by mid-2020
Japan’s Financial Services Agency (FSA) is considering enforcing significantly stricter crypto regulations. With these stricter regulations, the FSA wants to ensure that Japanese investors are better protected.
In doing so, the FSA already created its own section as well as a panel of financial experts in July. This section as well as panel is to assist the government to monitor digital as well as decentralized finance. The FSA expects the stricter regulation to come to enforcement by mid-2022 and hopes that the crypto market will have more stability. Moreover, at the same time, the FSA also wants to ensure that there is no interference with the development as well as innovation of the ecosystem.
Act of 2019 Revisited
Back in 2019, there was a similar law that required Japanese crypto exchanges to implement new features so that investors’ assets are protected. This law came about as a result of the attack on Japan-based crypto exchange Bitpoint. At the time, it resulted in a loss of $32 million.
Just in the last few weeks, there was another attack by the regulated Japanese crypto exchange Liquid Exchance, which resulted in more than $80 million in losses. As a result, the FSA continues to believe that further action to combat moneyand price volatility are to be taken.
The FSA announced at the beginning of August that it would adopt the FATF’s Travel Rule until 2022. This requires all service providers that trade in cryptocurrencies to submit transactions to the FSA. They introduced this regulation in 2019. The Travel Rule is a preventative measure against terrorist financing with digital currencies and money laundering.
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