With the incessant attacks on cryptocurrency exchanges in one of the most crypto-friendly nations, the Japanese government is not leaving any stone unturned in their quest to secure their financial sector by putting in place measures that will prevent wrongdoing and provide adequate security for the sector
The agency responsible for the security and maintenance of the Japanese financial sector, the Financial Service Agency (FSA) is considering to change the legal basis for how it regulates cryptocurrency exchanges in the region.
This move has become imperative and necessary due to the incessant attacks on the virtual currency sector by hackers and fraudsters. Now, the regulators are looking to formulate new laws to safeguard the industry, improve customer satisfaction and confidence of investors in the crypto market in Japan.
In this new measure, the financial services agency (FSA), after conducting rigorous research has decided to use the financial instrument and exchange act (FIEA) as the means of exchange, instead of the current legal foundation, the payment services act.
This new law according to the financial instrument and Exchange Act will improve customer protection, reshape the mindset of the customers on how to relate in the sector and instill more confidence in them, to continue investing and doing business in the cryptocurrency sector in Japan. Thus, FIEA has now charged security companies to manage customer funds and securities, such as stock separately from corporate assets.
The new law and legislation have in a huge way reduced the gap between the traditional financial sector and cryptocurrency industry as the new bill tends to recognize cryptocurrency legally as electronic money.
The move is such a landmark achievement and can give customers option and allow them to tap into the abundance of opportunities that cryptocurrency tends to offer.
Should the FSA start regulating exchanges under the FEIA, crypto will be treated as a financial product. The FIEA will also open up the possibility of introducing crypto derivatives like the exchange-traded funds
In January 2018 hackers stole over 500 million dollars from the Coincheck exchange. This theft coupled with the rate of cybercrime around the world, especially in the cryptocurrency sector, has made the Japanese government to put in extra effort in combatting the menace and to boost investor confidence.
Following the scam, the regulatory agency launched an investigation into 15 unregistered exchanges where it found a variety of security and organizational shortcomings in the firms’ business operations and transactions.
Similarly, Japanese Virtual Currency Exchange Association (JVCEA) earlier this month announced a set of rules to work against money laundering and other forms of cryptocurrency fraud.