Japan has been a leading light in the crypto world with regards to regulation and acceptance of cryptocurrencies as legitimate assets. They were the first major country to pass laws regarding how cryptocurrencies should be regulated. Now, as the host of the G20 summit in June, ti will be sharing its extensive experience to all member countries.
Japan to issue regulatory manual
Japan having legalized cryptocurrency as a legitimate payment method since April 2017, is one of the most advanced, crypto friendly countries in the world. Local press outlet Sankeibiz has stated that the Japanese regulators have created a manual for G20 countries to use for regulations. Particularly important is the ability to stop the outflow of virtual currency.
The news outlet stated that sources have said that while much thought had gone into regulation from a money laundering and terrorist financing point of view, there was a serious lack of thought on other issues. Protection of customer assets and the soundness of the market were neglected because most countries have only seen cryptocurrency as a means for criminal enterprise, not a potential driver of economic growth. This is the first time that Japan is sharing these ideas internationally and they hope that they will be able to influence their G20 partners to follow in their shoes with regards to how they view cryptocurrencies.
The G20 countries have seen an uptick in regulations, with many people saying that cryptocurrencies are being severely hampered by overregulation. This was particularly seen in the way many regulators have clamped down on online crypto trading via digital crypto exchanges.
The publication stated that
“since it is difficult to establish common rules, we [Japan] decided to put them in a guidebook, to have the know-how in a form that suits each country, and to raise the level of regulation.”
and that the manual addresses key regulatory areas such as “necessary measure to protect customer assets”, “measures against cyber attacks” and “ways of providing information to customers”.
Japan’s extensive experience as a crypto-friendly country
Japan has acted quickly in relation to world events, particularly the hacks of Coincheck and Zaif. Following those two breaches, the Japanese regulator increased its vigilance. They did spot checks at businesses and issued orders for business and process improvement to upgrade security. The FSA has also held study groups to determine new regulations that would help increase the security of exchanges that are licensed in Japan.
One such detail to come out of those study groups was announced earlier this month. They issued reference materials for suspicious transactions and advised companies that it was mandatory to report offenses to the authorities. Transactions that do not match FSA records (where it exceeds customer income or assets) are considered suspicious to the FSA.
Red flags should also be raised when customers open too many accounts, accounts with obviously fake names. IP tracking was declared mandatory to find out these suspicious accounts, so the use of a VPN is more or less restricted when dealing directly with crypto exchanges, at least as far as Japanese exchanges were concerned. These and more have all come from the FSA’s involvement with businesses that are aiming to become better and it is hoped that Japan can take a lead in cryptocurrencies much as it did with manufacturing in the middle of the last century.