Japan suggests streamlined legal framework for crypto intermediaries, surpassing merely exchanges
The Financial Services Agency (FSA) of Japan is working towards a more comprehensive regulatory framework for the cryptocurrency industry. Last week, the FSA presented its ideas to the Financial System Council Working Group on Payment Services, outlining proposals for new legislation and guidelines.
One of the key areas of focus is the need for clearer definitions of cryptocurrency intermediaries and their roles in the market. The FSA is discussing the possibility of regulating apps that provide access to third-party apps for crypto trading services. This comes as many so-called introducers who don't operate crypto exchanges do not consider themselves as CAESPs (Crypto Asset Exchange Service Providers).
The FSA is aiming to provide more regulatory certainty for non-exchange cryptocurrency intermediaries in Japan. In 2017, Japan introduced legislation for CAESPs, covering the sale and purchase of crypto, acting as a broker, managing money related to these services, or providing custody. However, the FSA recognizes that it is quite onerous if an organization is purely acting as an introducer and never touches any money.
To address this, the FSA is considering the potential creation of a new category of cryptocurrency intermediaries, separate from CAESPs. This could exempt intermediaries that do not handle money directly. The FSA is suggesting a case-by-case assessment for intermediaries based on their specific services and activities.
The FSA is also proposing guidelines for self-hosted wallets that offer introductory services to cryptocurrency trading. An example given by the FSA is a games app or self-hosted wallet providing access to a third-party app for crypto trading services and then switching back to the original app.
The proposals for easier legislation for non-exchange-based cryptocurrency intermediaries in Japan were developed by the country's legislative or regulatory bodies; however, the search results do not specify a particular individual or group responsible for drafting these suggestions.
Japan's regulatory efforts are not without history. The country was home to the Mt Gox cryptocurrency exchange, which was hacked in 2011 and 2014, leading to significant losses for many investors. The new regulations are aimed at preventing such incidents and ensuring the safety and security of the cryptocurrency market in Japan.
In conclusion, the FSA's proposals mark a significant step towards a more regulated and secure cryptocurrency market in Japan. The new regulations, if implemented, could provide clarity for intermediaries operating in the market and help prevent future incidents of fraud or hacking.
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