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Japan has long been considered one of the most crypto friendly countries in the world. That reputation started to grow early last year when it legalized digital currencies while many of its neighbors were working on outlawing them.
Over the weekend it was reported by Jiji Press that Japan’s Financial Services Agency (FSA) is ready to introduce new initial coin offering (ICO) regulations to ensure greater investor protection. Citing “informed sources,” the Japanese news outlet said that businesses wanting to raise funds using the ICO model, which is usually a token sale, would need to register with the FSA first.
The report goes on to state that the agency plans to limit the amount that can be invested in order to protect individuals from fraud. The FSA will be submitting the bills, to revise financial instruments, exchanges and payment services laws, to the next parliamentary session in January.
The move comes a week after South Korea, another crypto friendly nation, was in the process of introducing a crypto-friendly bill that will promote trading and exchange development.
ICOs have been a thorn in the side for regulators across the region because they raise funds in cryptocurrencies – such as Ethereum – as opposed to fiat currency, which of course can be audited and regulated. The fact that Ethereum has plummeted over 90% since its all-time high at the beginning of the year is a different concern.
Studies have indicated that as many as 80% of initial coin offerings launched in 2017 have been identified as scams. One such scam, Arisebank, has recently been in the news when the FBI arrested the CEO in Texas last week for the embezzlement of around $4 million from investors.
Japanese regulators clearly do not want to take the risk of having investors taken for a ride on their shores and a reliable regulatory framework provides reassurance for investors, both domestic and foreign, that they are protected from such scams.
Also in Japan, one of the 16 fully regulated crypto exchanges has announced that it is closing up in order to relaunch under the Huobi family. As Huobi is not one of the regulated 16, it has acquired a majority stake in Bittrade, which will reopen under the Huobi Japan Holding Ltd umbrella.
Bittrade has asked its customers to open new accounts at the Huobi platform and complete know-your-customer (KYC) identity verification again before transferring their digital coins.