The Financial Regulatory Authority of Japan (FSA) has begun talks on imposing tougher restrictions on cryptocurrencies to provide better protection for Japanese investors.
In July, the FSA set up a special unit and panel of economists to assist the government in overseeing digital and decentralized finance. As Jiji Press reports, the agency is also responsible for tracking the various developments in cryptocurrencies and the central bank’s digital currency programs.
The financial regulator hopes to impose the new crypto regulations by 2022. While not detrimental to ecosystem development and modernization, the FSA hopes that the new regulations will bring stability when the crypto market comes into force.
In 2019, the FSA amended a similar law that made it mandatory for crypto exchanges in Japan to implement new features to protect consumer property. The decision comes in the wake of the cryptocurrency hacking event that led a Japanese-based crypto exchange to lose $32 million.
Further adding to the recent hacking of the liquid crypto exchange, the FSA believes that operators in the country have not yet managed enough money laundering and price fluctuations.
Previously this month, the FSA announced that it would adopt the Financial Action Task Force Travel Rule by 2022, which would then be requiring service providers dealing in cryptocurrencies to share transaction data. Previously Travel Rule 2019 was introduced as a precautionary measure against money laundering and terrorist financing with cryptocurrencies.
The Japanese Virtual Currency Exchange Association helps to “establish the necessary mechanism” for the proper implementation of this Travel Law.
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