Japanese financial regulators intend to introduce strict regulations on Bitcoin (BTC-USD) plus other cryptocurrencies. The move, say regulators, is in response to a recent massive theft that happened at Coincheck. The theft at the Tokyo-based cryptocurrency exchange took place in January.
Taming speculative investment
In addition to addressing cases of theft of digital currencies, the financial watchdog is also seeking to curb cases of speculative investment. Earlier in April, the government announced that it is revising the Payment Services Act so as to protect cryptocurrency users from fraudulent operators. As part of the revision process, the government said it is introducing a registration system that will be used to store information on all dealers. The revision targeted all uses of cryptocurrencies including remittance and payment.
A sharp increase in the prices of Bitcoin at the end of last year sparked a wave of speculative investment among cryptocurrency enthusiasts. The wave of interest has given regulators the excuse to exert more and more centralized control over the Bitcoin network.
The agency says that apart from protecting users, the regulations will also be aimed at increasing the level of adoption and use of cryptocurrencies, so goes the claim. According to the FSA, the move is to avoid a situation where the country has no law to guide the use of virtual currencies in days of widespread use, meaning no ability to collect taxes if the currency outcompetes the Yen. This is according to a senior official from the agency who spoke on condition of anonymity.
Initially, the agency says it did not expect to have cryptocurrencies used as an investment instrument. The FSA thought Bitcoin would maintain its intended function of being a mode of payment.
In April, the regulator instituted a panel of experts to help close the gap between the regulatory framework and the actual situation in the cryptocurrency market. The panel later released a report that pointed to a possible shakeup of existing regulations.
According to a report by CCN, FSA is seeking to have the cryptocurrency sector placed under the Financial Instruments and Exchange Act (FIEA). This is expected to have an effect on the current laws that govern financial securities companies and stock brokerages.