A leading financial regulator of Japan has clarified its position in relation to bitcoin exchange-traded funds (ETFs), cryptocurrency derivatives and upcoming changes in regulation.
Recently it became known that the Japan’s Financial Services Agency (FSA) considering approval of one or several bitcoin ETF to track the cryptocurrency. However, on Friday the representative of the Agency stated:
"The approval of the ETF ― it's just a rumor. At the moment, we do not consider the possibility of their approval. Cryptocurrency derivatives, i.e. the listing of bitcoin futures on the financial instruments market is also not being considered by the Agency."
Today in the media there is an explanation from the FSA:
"Our position is based on the findings of the research group, which studies the exchange of virtual currencies. Given that it is difficult for us to find constructive and social significance of trading crypto-assets derivatives the need for it yet."
Recently the FSA has published updated rules for crypto operators, based on resulting from the 11 meetings of the research groups. Self-regulation will play an important role in the ecosystem. In October last year, the Agency approved the Japan Virtual Currency Exchange Association (Jvcea) as a self-regulatory organization (SRO). It is expected that the Association will perform self-regulatory functions subject to the issues identified by the FSA.
FSA has prepared a list of issues on which to SRO to focus on:
"These challenges insufficient risk assessment of crypto assets to be handled, inappropriate sales of crypto assets issued by providers themselves, excessive advertisement, over-emphasis on profit generation, no check and balance by directors and auditors, no internal audit, insufficient internal management control, insufficient AML/CFT measures and segregation of customer asset, and reluctance to disclose corporate information."
In the near future, the FSA will focus on “investment-type ICOs”, and will also explain the importance of adhering to the financial rules while attracting investment in cryptocurrency projects. In particular, upon the soliciting 50 or more investors, the Agency plans to require the Issuer publication of all information in the public domain.
Brokers and dealers involved in investment-type ICOs will be regulated at the same level as securities firms. They will be required to study the business and financial conditions of the issuer. To brokers and dealers will also apply as "unfair trading regulations," and rules to prevent insider trading. In addition, there will also be restrictions on the involvement of retail investors. For the regulation of other types of ICO Agency plans to interact with cryptocurrency exchanges to obtain from them such information as the feasibility of the project, etc.