Japan plans to ease crypto restrictions
Japan needs to be more convinced of the merits of making it easier to invest in cryptocurrencies for its people, the country’s main regulator has said.
While the Commissioner of the Japan Financial Services Agency (FSA), Junichi Nakajima, said he was open-minded about the potential benefits that assets such as bitcoin have as a quick and cheap way to invest. ‘to send money, in Japan, they are mainly used for speculation and investment purposes, not as a means of transferring money.
New challenges come from a wider proliferation of companies involved in decentralized finance, he said.
“We need to carefully consider whether there is a need to make it easier for the general public to invest in crypto assets,” said Nakajima, 58, who last month became head of Japan’s financial regulator.
Unlike the United States, where investors now have a plethora of ways to invest in the burgeoning asset class, Japan remains severely constrained by comparison.
The FSA set up a study group of external experts last month and is expected to consider regulatory responses to decentralized finance in the coming months, with investors turning to Nakajima for clues to the outlook.
Nakajima participated in the development of Japan’s first regulatory framework for cryptocurrency assets, including the registration requirement for exchanges in 2017.
The nation has since tightened, following a massive theft of coins from the Tokyo Coincheck Inc stock exchange in 2018, which revealed lax internal oversight and customer protection.
While Nakajima said the current regulatory framework on cryptocurrency exchanges has been effective in protecting customers and combating money laundering, many of the 31 registered exchanges are struggling financially.
Their business situation “is rather difficult,” he said.
In the United States, Securities and Exchange Commission Chairman Gary Gensler has said regulating cryptocurrency exchanges may be the easiest way for the government to get a handle on digital token trading quickly, but he’s also concerned about new ways people are getting into cryptocurrency, like peers. – peer-to-peer lending on decentralized financing platforms.
A crackdown in China, on exchanges, miners, and traders, has left some players turning to lesser-known tokens and decentralized storage technologies.
Nakajima, a career bureaucrat and engineer who graduated from the University of Tokyo, said that unlike stocks, cryptocurrency has no underlying assets and is therefore subject to sharp price fluctuations. This is one of the reasons why the Japanese regulator does not allow cryptocurrency investment trusts, which are seen as an easy way for the public to gain exposure to the asset class.
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