The head of the Japanese Financial Services Agency expressed that Japan will regulate cryptocurrencies in a way that the new technological innovation progresses in the country.
Toshihide Endo, the commissioner of the Financial Services Agency of Japan claimed that the Agency wishes to keep a balance between protecting consumers and promoting the technological innovation. This stance by the Japanese authority will likely encourage the crypto industry of Japan. Endo remarked:
We have no intention to curb (the crypto industry) excessively,
We would like to see it grow under appropriate regulation.
Japan is known to maintain a rather accommodative environment for the growth of the crypto industry. It was in fact, among the first countries to recognize bitcoin and other cryptocurrenicies which are now considered legal tender under the Payment Services Act. Japan is also among the biggest markets of the bitcoin exchanges. Mt. Gox, a cryptocurrency exchange company which used to provide about 70% of bitcoin transactions, was also based in Tokyo, Japan. Many of the well known fintech giants like Rakuten, Line, SBI, DMM, and GMO Internet are also based in Japan.
Nonuchika Mori, the previous chief of Japan’s FSA was at the leading front in providing this nurturing environment. He did this under the perspective that Japan needed to improve its fintech sector as it was very much behind compared to its neighbors – China and South Korea. Mori, with his progressive policies in the fintech sector lead Japan to become a well recognized crypto market, leaving even South Korea and the US behind.
However, with a loosened hand of regulation in the industry, some grave days for Japan were inevitable. Mt. Gox was inflicted by a brutal cyber attack, which left it bankrupt. In late January this year, an exchange Coincheck made a massive heist, and as a result stole an enormous amount of $530 million in digital currency (NEM tokens). This lead FSA to put restrictions and regulate trading and exchanges. According to the amendments made in the Payment Services Act, cryptocurrency exchanges now need to be registered with the FSA in order to operate. This process can take up to six months.
It is however, noteworthy that after the unsparing heist Japan did not ban the industry. Instead, it introduced regulatory measures.
Japan’s continued positive and eager-to-progress attitude can be seen in the newly appointed head of the FSA, Toshihide Endo, who by his words seems determined to further advance Japan in its quest of becoming a crypto hub, but not at the stake of the protection of the consumers.
With his approach Japan will regularize the crypto industry only where it is needed. For instance, recently the management at many of the Japanese exchanges were found to be careless by the FSA. According to the FSA, they lacked basic internal controls to protect users and prevent money laundering. Consequently, some of the exchanges were temporarily suspended.
Therefore the FSA prioritizes balance, with regulation in moderation, so that Japan’s fintech continues to grow but stays non-threatening.