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On December 1, it was reported that Japan’s Financial Services Agency is set to launch regulations on initial coin offerings (ICO). Japan has moved towards regulation in this area because of concerns of ICO frauds and scams around the world. The aim of the regulation is to protect Japanese investors by limiting the amount they can invest in ICOs.
Additionally, businesses offering their own cryptocurrencies will be required to register with the Financial Services Agency. For the regulations to take effect, the Financial Instruments and Exchange Law, and the Payment Services Law will need to be amended. Amendments are expected to start in January 2019 as part of the routine parliamentary sessions.
News of regulation within the crypto market is usually met with suspicion and concern. Most people agree that some level of regulation is required in order to protect people to a reasonable degree and allow for continued safe use of cryptocurrencies. However, most crypto enthusiasts are equally concerned that the regulation needs to be appropriate and not oppressive. Cryptocurrency is a relatively new industry that is still growing and finding its feet. Crypto still has a long road of innovation ahead of it, and some people are concerned that regulation could stifle this growth and innovation.
Getting this balance right is a hot topic. After all, not regulating has its own unique set of issues. An unregulated crypto market could see more people falling victim to scams and ultimately turning the public against crypto as a whole, believing cryptocurrency itself to be a scam. This would be catastrophic for an emerging industry.
Japan has historically been a pro cryptocurrency and pro blockchain country. Japan is known for prioritizing technological advancement, and crypto is just one part of that. Because of this, regulation tends to be trusted more in Japan since it isn’t seen as an attempt to stifle crypto innovation, but rather to protect its citizens. There is a need for citizens to be protected from ICO scams, for example, multiple studies have indicated that as many as 80% of ICOs launched in 2017 were scams.
Having a more regulated industry in Japan, also fosters feelings of trust towards the country’s cryptocurrency market, encouraging people to feel safe in investing, and possibly invest more. This move could be seen as Japan taking control of its crypto future and securing it maintains its reputation as a pro-crypto country.