Japan is moving closer to making the cryptocurrency sales as a legitimate one in the country. The country is facing tremendous pressures from the global community for comprehensive regulations on the virtual currency trading. The country is the biggest market for digital currency in Asia and the second largest in the world after the United States. This apart, the hacking of Coincheck in January also provided an added pressure on the country to legitimize the coin sector.
Regulation of ICOs
The new set of guidelines was prepared by a research group that was backed by the government. It would standardize Know Your Customer (KYC), as well as, Anti-Money Laundering (AML) requirements legally. Japan is also keen that the guidelines covered the protection of debt holders and existing shareholders. This is an obvious attempt to cut insider trading apart from lifting the standards for cybersecurity practices, financemagnates.com reported.
Aside from these, the guidelines have also focused on initial coin offerings (ICOs). In a new environment, the issuers of ICOs would be asked to showcase investors as to how the funds would be deployed exactly. That is because it is primarily the contributor’s funds and they ought to know where their money is going. The draft guidelines pointed out that the new requirements that were laid out were still minimal only. This meant that there could be more in the offing.
Despite the fresh regulations, these were termed as more friendly towards ICOs than the neighboring countries in the region. For instance, China and South Korea have banned ICOs towards the end of the last year after a number of digital currencies price have surged to reach their lifetime highs around Christmas.
Reacting to the latest move, researcher of Mizuho Research Institute, Kenji Harashima, stated, “ICOs are groundbreaking technology, so if we can implement good principles and rules, they have the potential to become a new way to raise funding.” The country’s decision comes on the back of increased regulations of ICOs around the world. Tightening of regulations on cryptocurrency-related business or activities is also going on for quite some time in the current year.
Others To Come Up With Regulations
Though the United States continues to be the leader in the cryptocurrency market, its financial regulator, SEC, has not been sparing any efforts to regulate the sector. As the prices of most of the virtual currencies have plunged, there was no alternative for SEC but come up with the legal classification of the ICO tokens in the last few months. That also led to ambiguous statements sometimes through the new regulations allowed the regulator to unearth fraudulent elements.
The new regulations were necessitated after the hacking of over $530 million worth of NEM tokens in January from Coincheck exchange. After the hacking issue, the government was more vigilant to enforce the guidelines prescribed in the Virtual Currency Act that was passed a year ago. However, there was also the voice of dissent against the fresh regulations terming that such actions were against the crypto nature. In any case, if the market should sustain for long-term gains, it is necessary to face fresh regulations.