New rumblings from Japan’s Financial Services Agency suggest it may pull the trigger on an ETF, something its SEC counterparts have been hesitant to do.
The Japan Financial Services Agency (FSA) has been very active in the crypto-space in the past few days, focusing on regulation of unregistered investment firms and potential development of a crypto exchange-traded fund (ETF).
According to a Sankei News article from January 8, Japan’s FSA wants to strengthen its policy regarding the fundraising initiatives of unregistered investment firms. The Financial Instruments and Exchange Act currently bans such firms from seeking fiat from investors but doesn’t address the pursuit of digital currency from investors.
The FSA decided to focus its attention on closing this loophole after it discovered that unregistered investment firms had collected approximately 8 billion yen worth of virtual currency in 2018. Unregistered investment firms are also under scrutiny because of assorted Ponzi and pyramid schemes uncovered in Japan. One such scheme led to the arrest of eight men who allegedly duped 6,000 investors out of 7.8 billion yen ($68 million) in crypto assets.
The FSA is also looking into the development of a crypto ETF. There’s still a chance Japan’s FSA may approve “exchange-traded funds that track the asset class,” according to an anonymous source cited in a Bloomberg article published on January 6.
The regulatory agency dismissed plans to revise the nation’s securities laws that would have permitted cryptocurrency futures and options to be listed on major financial exchanges.
However, according to Bloomberg’s anonymous source, Japan’s financial watchdog is “currently gauging industry interest in ETFs tracking digital currencies.”
According to Bloomberg, Japan’s Liberal Democratic Party will most likely submit a draft of this legislation by March 2019 and it could become law by 2020. This legislation would not only allow for a crypto ETF, but could also make room for more self-regulation in the crypto-space. It may also classify many ICO tokens as securities.
Cryptocurrency regulations have been a main area of focus for Japan’s FSA of late. In May 2018, ETHNews reported that the FSA planned to impose stricter laws governing crypto exchange platforms in the wake of the Coincheck and MtGox hacks. However, in August, Toshihide Endo, the newly appointed FSA chief, stated that he saw no reason for excessive crypto regulation.
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