The Financial Services Agency (FSA), Japan’s financial regulator, has begun negotiations about setting stronger restrictions for cryptocurrencies in order to better protect Japanese investors.
The Financial Services Authority (FSA) established a dedicated division and a panel of financial experts in July to assist the government in overseeing digital and decentralized money.
According to Jiji Press, the organization will also be in charge of keeping watch of advancements in cryptocurrencies and central bank digital currency (CBDC) programs.
By mid-2022, the financial regulator plans to replace and implement the new crypto legislation. The FSA hopes that the new laws will bring stability to the crypto market while also ensuring that the ecosystem’s development and innovation are not harmed.
In 2019, the FSA updated similar legislation, effectively requiring crypto exchanges in Japan to install new security safeguards to protect their users’ assets. This decision was made in response to the $32 million loss suffered by Bitpoint, a Japanese crypto exchange.
Aside from the recent Liquid crypto exchange incident, the FSA feels that operators in the country have failed 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, which will oblige all cryptocurrency service providers to submit transaction data. The Travel Rule was enacted in 2019 as a deterrent to money laundering and terrorist financing using cryptocurrency.
The Japanese Virtual Currency Exchange Association will back the effort to “create a required framework” to accurately apply the travel rule.
