Japan’s Financial Services Agency (FSA), the government body that manages the country’s services, banking, and exchange services, plans to set up tighter control on cryptocurrencies in an attempt to curb speculative investments.
Last year, the FSA introduced legislation to make bitcoin and other cryptocurrencies legal. Japan’s Accounting Standards Board even created a framework to examine how the accounting industry can address cryptocurrency. The new legislation revised the Payment Services Act so that it recognizes cryptocurrency as a legal currency.
Talking to the Japan Times, a senior official from the FSA said the move was designed to “prevent a situation in which there is no law governing (cryptocurrencies) when they come into wide use.”
Japan’s burgeoning crypto market
The new legislation paved the way for mass adoption of cryptocurrency in Japan, which is now the second-largest cryptocurrency market in the world, influencing other major economies to follow suit and introduce similar cryptocurrency regulations.
Having positioned itself as one of the fastest-growing crypto hubs in the world, cryptocurrency mining is taking off in Japan.
While Japan’s crypto regulatory revamp may be succeeding in propelling the country to the forefront of mass cryptocurrency adoption, the FSA did not forecast that adopters would be using the likes of bitcoin for investment purposes rather than for payments.
Consequently, Japan is to tweak existing regulations and set up tighter control on cryptocurrencies to monitor speculative investments.
The FSA is going to bring the crypto exchange sector under the purview of the Financial Instruments and Exchange Act (FIEA), meaning laws related to financial security companies and stock brokerages will be affected.
If the financial body’s proposed revision to cryptocurrency legislation does occur, digital currencies in Japan would be given ‘financial product’ classification, making the entrance into the mainstream financial markets feasible.
Limiting margin traders in Japan
The announcement that the FSA is going to set up tighter control on cryptocurrencies follows a move made last month by digital currency regulators in Japan to cap the amount margin traders can borrow when trading. A self-regulatory organization in Japan is looking to restrict the limit on how much investors can borrow while they are margin trading.
Gabrielle Pickard-Whitehead is a freelance journalist and copywriter based in the Peak District, UK. Since 2006, Gabrielle has followed her passion for writing and has sculptured a rewarding career out of her love for the written word. Gabrielle thrives on creating compelling content related to current affairs, politics, financial news and the latest advancements in technology and innovation. Gabrielle is excited about having the chance to write about the constantly-evolving world of crytocurrency and enabling people to learn more about this rapidly-advancing digital asset.