The new regulation will be aimed at enhancing investor protection in Japan. The Financial Services Agency (FSA) of Japan has begun negotiations about implementing stronger rules on cryptocurrencies in order to protect Japanese investors.
The FSA established a dedicated division and a panel of financial experts in July to assist the government in supervising digital and decentralized money. According to Jiji Press, the organization would also be responsible for monitoring advances in cryptocurrencies and central bank digital currency (CBDC) programs.
By mid-2022, the financial regulator wants to replace and implement the new crypto legislation. The FSA thinks that the new laws would offer stability to the crypto sector while preserving the ecosystem’s development and creativity.
The FSA updated similar legislation in 2019, effectively requiring crypto exchanges in Japan to adopt new protections for user asset protection. This move was made in response to the attack of Bitpoint, a Japanese cryptocurrency exchange that suffered a $32 million loss.
Apart from the recent attack of the Liquid cryptocurrency exchange, the FSA feels that operators in the country have yet to adopt adequate anti-money laundering and price volatility controls. The FSA said earlier this month that it will adopt the FATF’s Travel Rule by 2022, requiring all service providers that trade in cryptocurrencies to provide transaction data. The Travel Rule was implemented in 2019 to combat money laundering and terrorist financing using cryptocurrency.
The Japanese Virtual Currency Exchange Association will support the effort to “create a necessary framework” for accurately implementing that travel rule.
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