The Japanese Financial Market Authority (FSA) has issued a series of new guidelines for cryptocurrency trading. The new rules are directed to both country’s crypto exchanges and blockchain companies. As a result, Japan continues to create a regulated environment for the sustainable growth of the crypto-economy.
Japan continues to work on a regulating crypto ecosystem. Last year, it officially started to recognize Bitcoin as a legal tender. However, this was followed by regulations that should apply equally to financial service providers and crypto traders. Japan opted for a proactive approach to cryptocurrencies, giving the ecosystem the chance to grow while adhering to specific rules.
A stable market development
Since their firm entry into the crypto sector, the Financial Market Authority has started a cleansing campaign for the crypto market. All trading venues for cryptocurrencies had to undergo a state audit, and their primary focus was on the implementation of anti-money laundering guidelines and compliance with the know-your-customer principle.
During the investigations, a total of eleven crypto exchanges received an official license, followed later by others. The selected crypto exchanges are equipped with legal certainty, according to them, which helps both the exchange operators and the crypto investors in the long-term. However, compared with the regulations of the traditional financial markets, crypto exchanges still operate on a thin thread.
For the future, the FSA promised to tighten up the selection procedures for granting licenses to crypto exchanges. According to the local news Japan Times, the number of questions put to the test has been increased to about 400. It now compels the applicants to submit reviews of the board meetings to check if the company is discussing the security and financial health of the company.
In doing so, the Japanese government is trying to avoid another event similar to Coincheck in early 2018.
In Japan, on the other hand, the government and the FSA is trying to create the right conditions to exploit just these potentials of the crypto industry. The enormous growth is funneled through clear regulations into an orderly path. By doing so, the regulators are building healthy crypto-ecosystem; and also security and confidence in cryptocurrencies and blockchain technology.