New rules could enhance credibility of Japan's crypto market

Author: Karry Lai | Published: 26 Jul 2018

Japan’s Financial Services Agency (JFSA) is reportedly cracking down on cryptocurrencies, in a move that could see it changing its existing exchange rules. It is looking into tightening the regulation of exchanges by moving them under the remit of the Financial Instruments and Exchange Act (FIEA) rather than the Payment Services Act.

After the $530 million Coincheck theft in January, all exchanges were investigated. Coincheck was ordered to raise its security standards and to submit a report on preventative measures to avoid a future attack. The cyber heist has raised alarm bells for the JFSA, and it intends to keep a closer eye on the operations of exchanges, especially on security measures to protect customers.

According to Naoya Ariyoshi, partner at Nishimura & Asahi, if cryptocurrencies fall under the FIEA, they will be regulated as securities so there is a possibility that the regulations on virtual currency exchange service...