Japan’s regulator, the Financial Services Agency (FSA), has suggested that there needs to be a balance between consumer protection and technological innovation as the blockchain industry expands.
The government body’s top regulator Toshihide Endo has suggested that the industry needs to grow under “appropriate regulation” and as such won’t need government intervention to further enforce curbs on how exchanges operate within the country.
On-site inspections of Japanese exchanges by the FSA early this month revealed that investor protection remains a key issue but as the commissioner stated, the government has “no intention to curb excessively”.
A key finding of the report following the last FSA inspections was that exchange’s internal control systems were showing signs of lagging behind, given the rapid increase of transactions; an increase partly accredited to investors climbing back into the market after 2017 recent falls. The Japan Virtual Currency Exchange Association (JVCEA) had called for trading limits in line with FSA suggestions earlier this year.
The JVCEA, which has already applied to the FSA to become cryptocurrency’s one and only self-regulatory body in the country, had attempted to stem the tide of transactions earlier this month when it recommended its own “appropriate regulations” for growth by proposing new rules that would affect the way exchanges operate, placing privacy coin listings and insider trading under the regulatory microscope.
Another tool for limiting the transaction surge suggested by JVCEA was to enforce trading caps and restrictions according to age group, i.e. the very old and the very young. The FSA regulator has already released figures showing that in April, there were 142,000 crypto traders in Japan. That monthly figure represents a small percentage of the total of 3 million Japanese traders.
The JVCEA has suggested that the new borrowing limit for trading platforms in Japan should be set at four times the customer deposit when margin trading. Currently, there are no limits on how much cryptocurrency investors can borrow when trading in this way.
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