Regulation of Unregistered Crypto Investment Schemes is now a Priority in Japan
The Japan’s financial regulator is reportedly aiming to close the legal loophole that gives unregistered
investment firms to solicit for funds in cryptocurrencies rather than cash.
According to a report from Japan, the Japanese Financial Service Agency (FSA) is planning revise some
rules to bring such schemes under the country’s Financial Instruments and Exchange Act but there is no
timeline for the changes as of now.
As at now, the act prevents unregistered schemes from collecting investments in fiat currencies, but it
does not cryptocurrencies into consideration.
This issue has received lot of increased focus from the Government watchdog due to the rising
incidences of cryptocurrency pyramid schemes in the country. In November 2018, the Tokyo police
arrested eight men alleged to have been running such a shady scheme that collected a reported sum of
7.8 billion yen (almost $69 million) in cryptos from thousands of victims.
They were reported to have collected most of the payments in bitcoin, as well as another 500 million
yen (about $4.40 million) in cash, under the pretense of a bogus investment firm called Sener.
The Japanese officials were reported as saying that, if the scam had solicited only cryptocurrency, it’s
possible the criminals might not have been caught.
The FSA has been actively regulating the cryptocurrency space since the shockwave following the
collapse of the Mt Gox exchange in 2014. Various Measures have included instigating a licensing
scheme for cryptocurrency exchanges and scrutinizing exchanges over security and compliance with
anti-money laundering rules.
The agency is now considering approving crypto exchange-traded funds (ETFs). But at the same time, it
has now apparently dropped plans to approve trading of crypto derivatives on financial exchanges due
to speculative nature of the Product.