Japan’s Regulators to Create New Legislative Framework for ICOs

Japan’s Regulators to Create New Legislative Framework for ICOs

If 2017 was the year that ICOs caught on with investors, 2018 is shaping up as the year that regulators responded.

Across the world, there is now increased attention from regulators on how best to protect investors against the regular occurrences of fraud and incompetence that currently seem to be plaguing the ICO domain. 

 Open-minded Attitude

Now Japan too is looking at how to best to strike a balance between protecting innovation and protecting individuals. Regulation so far has been particularly light in Japan with regards to cryptocurrencies, with authorities seemingly keen to allow the cryptocurrency experiment to develop, particularly as it might help drive what has otherwise been sluggish GDP growth.

Nevertheless, recent events like the theft of half a billion dollars worth of NEM from the Coincheck exchange, have led to something of a change in mood, and regulation of the ICO and cryptocurrency space is back on the agenda.

Last year, the Japanese government passed the bitcoin payment law, which officially recognised bitcoin as legal tender, as well as other measures such as giving cryptocurrency exchanges legal status. However, missing from that legislation was a proper consideration of ICOs.

Japanese daily business newspaper Sankei Shinbun is reporting that the FSA is revising ICO regulations as well as taking a more active role in curbing any fraudulent or unlawful ICO activity. According to the report, “there is an increasing demand for amendment of the law, and the FSA is planning to consider suspension of inappropriate ICOs.

In fact, they have already stepped up their oversight of the space in a bid to protect Japanese investors. Earlier this month the FSA issued a warning to Macau-based Blockchain Laboratory Ltd for targeting Japanese investors without first registering with the relevant authorities.

A first round of feedback from the FSA’s research is expected over the coming weeks.