Cracking down on scams, Japan moves to regulate crypto investment firms, ICOs and tokens
After the establishment of the Virtual Currency Exchange Association (JVCEA) and awarding the cryptocurrency industry with a self-regulatory status in October of last year, Japan remains on the forefront of all the latest developments in the digital currency regulations worldwide.
On January 8th, JVCEA has announced it’s working on the draft for the regulation of investment firms that accept funds in cryptocurrencies instead of fiat. Reportedly, before these types of businesses fell into the gray area of the law, since the Japan’s Financial Instruments and Exchange Act prohibits operation of unregistered firms collecting funds in cash. At the time that legislation was developed, there weren’t cryptocurrencies in place, which now allowed a number of scammers to take advantage of this tiny, but important detail.
According to the Japanese officials, the reason of reworking the current legislation so quickly became the recent scandalous pyramid scheme, which led to an arrest of eight men suspected in a total of 7.8 billion yen ($68.4 million) theft of funds from investors. According to the sources close to the investigation, the suspects deliberately chose crypto over fiat due it being under the grey area of the law.
Additionally to the new regulations of crypto investment firms, JVCEA is also currently working on the amended Initial Coin Offering (ICO) legislation, as well as developing a new token classification system, which will make certain tokens subject to regulations and certain legal requirements.
First versions of all three drafts are expected to be introduced later in 2019. We’ll continue following new developments on this, check back for updates!