Japan’s FSA moves toward new cryptocurrency regulatory framework, to offer better protection?

According to reports from Japanese media, the Financial Services Authority of Japan is considering changing the legal basis on which cryptocurrencies are regulated.

This move will mark the shift of cryptocurrency in Japan from status as electronic money to a financial product. The change will be executed by changing the basis for cryptocurrency regulation from the Payment Services Act, which it is currently under, to the Financial Instruments and Exchange Act [FIEA].

Under current regulation, exchanges still have to register as a trader. However, if the exchange undergoes deterioration of any form, the customers’ funds would not be sufficiently protected. The change in the regulatory framework will lead to the strengthening of user protection.

The FIEA law binds securities companies and others to an obligation to manage customer assets separately from corporate and institutional assets. It also includes a strict investor protection system, providing security against issues such as insider trading.

Sankei, a Japanese media outlet, speculates that this move may open the door for trading cryptocurrency derivatives in Japan, such as futures or ETFs. This would undoubtedly further the cryptocurrency boom that Japan is currently experiencing.

This is the latest in a wave of measures to tighten security and investor in Japanese cryptocurrency exchanges. After Tokyo’s Coincheck incident in January of this year, which resulted in NEM [XEM] tokens worth $530 million being stolen, the FSA has begun tightening the straps on exchanges.

Moreover, with big institutional names moving into the picture, Japan’s regulatory authorities are trying to find the balance between an unchecked market and a suffocatingly regulated one.

SBI Group, one of Japan’s biggest financial services groups, recently launched SBI Virtual Currencies, a crypto trading platform with backing from the group. This would put additional pressure on the need for a strong regulatory framework for such solutions to be built on.

The post Japan’s FSA moves toward new regulatory framework, to offer better protection? appeared first on AMBCrypto.