In 2017, we’ve seen how the crypto market hit the mainstream. Unfortunately, its Wild West nature concerns a good number of regulators. It can be used for different illegal activities including money laundering and even financing terrorist groups. And since the start of the year, we’ve seen countless regulatory changes all over the world.
You have the likes of China that is constantly making the necessary regulatory changes in order to clamp down on crypto-related activities. These days, China has been in the headlines yet again with a renewed interest in stopping crypto activities in the country. The country announced that it prohibits malls and hotels from hosting crypto-related activities. However, not all countries have the same approach as China.
In terms of regulatory changes in the crypto market, Japan has been one of the most progressive countries in dealing with the industry. In fact, cryptocurrencies are popular in Japan to the point that there are businesses accepting cryptocurrencies, not to mention a lot of crypto ATMs.
One of the biggest problems in the crypto market is hacking. Many crypto exchanges have already been victimized by hackers losing millions in their own funds and users’ funds in the process. Japan’s regulators reacted by implementing strict rules and regulations for crypto exchanges to operate in the country.
With these new regulations, Japan’s financial regulator, the Financial Services Agency (FSA) required security measures to be met by exchanges. A source mentioned at The Japan Times last April that te agency made the necessary adjustments “to see whether they (crypto exchanges) are properly conducting risk management”. And because of this, established crypto exchanges such as Kraken opted to move out of the country.
Fortifying the Rules and Regulations
On September 2, the Financial Services Agency is said to be fortifying the registration process of screening crypto exchanges. The several features added to the previous legislation will increase “the number of questions asked when screening applications to about 400 items, up fourfold”.
In addition to this, the agency will also require access to the record of board meeting and also, the agency will have the freedom to check the company’s shareholders. This way, the agency can easily “check for links to antisocial groups”. In the past, the agency banned cryptocurrencies such as Monero from being traded because of the extra anonymity that it gives its users.
January’s Coincheck Incident
The primary reason regarding the strict rules and regulations was due to the hacking incident that occurred in January. Coincheck was reportedly hacked $532 million.
In August, Toshihide Endo who works as the commissioner of Japan’s FSA mentioned to Reuters that the goal of the agency is to ultimately help the crypto market grow but under appropriate regulatory measures that will be applied by the FSA.
This could actually be a good thing for the crypto market. Regulatory clarity is said to be what the institutional investors are waiting. As for Japan, the agency is doing a good job in helping not only the crypto-related businesses but also investors. It helps protect the interest of investors, without stopping the growth of the crypto market completely unlike countries such as China.