The Financial Services Agency of Japan (FSA) on Friday published the long-awaited preliminary report on the new regulatory framework for cryptocurrencies and initial coin placements (ICO), Bitcoin.com writes.
Discussion of the document was included in the agenda of the eleventh meeting of the research department of the department and contains recommendations for the previous ten meetings. According to local media, the proposed measures did not arouse significant objections, therefore, it is expected that based on them, the FSA will draft a new bill.
One of the main points of the report was the prevention of hacking and working with them – this year the country's cryptocurrency exchanges in such incidents appeared twice, and both times with large sums: Coincheck in January and Zaif in September.
The FSA will require cryptocurrency exchanges to reinforce customer property management and maintenance systems and have reserves sufficient to cover losses in the event of a break-in. The document also proposed measures to prevent the bankruptcy of cryptocurrency exchanges. In part, this has already been implemented in the current licensing system.
The regulator notes the fact of the rapid development of the financial and technological industry and recognizes the importance of its self-regulation. In October, the Japan Association of Virtual Currency Exchanges was accredited by the FSA, with which it received the right to set rules for industry participants.
The FSA considers it permissible to deny registration to operators who do not want to join an accredited association and follow its rules, or will not have their own systems to comply with these rules. Given the positive experience of licensing cryptocurrency exchanges in Japan, they are probably among the first to be able to make self-regulation work in this industry.
Among other things, the document discusses restrictions on listing of private cryptocurrencies , derivatives trading and margin trading – already familiar to us proposals for earlier discussions.
According to the FSA, ICO "may be subject to regulation in the field of securities".
“We are implementing measures of an administrative nature,” the agency reports, whatever that implies.
Depending on their structure, tokens can be regulated in accordance with the law on financial instruments and stock exchanges or the law on financial settlements. The possibility of vesting third-party organizations with the authority to study the business of issuers of tokens and their financial position is also being considered.
A separate place in the report is reserved for crypto-custodian business, which is currently not regulated by Japanese laws. The FSA proposes to create a registration system, implement internal control systems, divide management of client funds and company funds, oblige services to prepare hacking response procedures and have reserves for paying compensation to users – in general, everything that is already applied to cryptocurrency exchanges under the current licensing system.
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