Teether (USDT) however took a unique standing as it was not classified as VC due to its currency being pegged to USD. Hence, the Financial Instruments and Exchange Act clarifies the “Virtual Currency” to be not listed as “Securities”. After rectification, 16-member exchanges was registered with the monitoring of Japan Cryptocurrency Business Association (JCBA). The process can last for up to 6 months and has a very strict review of network security and AML/CFT. The ‘VC’ was bestowed to FSA (Financial Services Agency) to begin its intervention by requiring all exchanges registration under them. It is stated that cryptocurrency was usable as a payment method in trading with an unspecified person and was not subject to fiat currency regulations. This was found out when the Payment Service Act took on the responsibility in regulating this newly termed “Virtual Currency(VC)”. The classification into cryptocurrency definitions and regulatory bodies continues to evolve in order to determine the right regulatory body. Table 1: Chronological regulatory happening in Japan (Fig 4 & Table 1)įigure 4: Capitalization of cryptocurrency market(blue) and bitcoin (red) since April 1, 2018 This hence sees an impact on the market capitalization and trading volume. 18% of the global exchanges supported JPY for trading and was among the leading global currency (Fig.3).įigure 1: National currency supported by cryptocurrency payment companiesįigure 2: Payment service providers’ perception of the current regulatory environment.įigure 3: BTC exchange trading volume share by national currency Regulatory Implementation Impact on MarketĢ018 was the year when the nation made swift amendments on how cryptocurrency regulatory should be structured. Though 41% of cryptocurrency payment companies portrayed the insufficient regulatory environment and felt that additional structure was necessary to its current state, there was still among 23% of them support JPY currencies. Garrick Hileman & Michel Rauchs, APAC usage of cryptocurrency are distributed among 36% (merchant services), 35% (B2B payments), 82% (money transfer service) and 37% (cryptocurrency platform). Based on Global benchmark cryptocurrency studied by Dr. The acknowledgment of Bitcoin as a payment method sees a surge in the usage across payment service providers. Some mentioned are a self-regulatory advisory body (JVCEA), deemed dealers, hack security countermeasures and the possible subjection of ICO to the securities regulation. ![]() ![]() Though legalization was formed, Zaif’s hack pushed FSA to create a new regulatory framework including measures which were not addressed in existing laws. The country has since adopted a progressive regulatory policy, hoping to give appropriate guidance without impeding technology and innovation.įSA further tightening their due-diligence effort had led to 13 of the tentatively approved exchange providers giving up their plans to become registered operators because they were unable to meet the high standards demanded. Japan was the first country to regulate cryptocurrency trading after experiencing hack cases such as Mt.Gox and Coincheck that incurred $450 million & $530 million respectively. ![]() In a time of volatile markets, hackers are also active in the sector.īitcoin, the best known virtual currency, lost over half its value earlier this year after surging more than 1,300 per cent last year.As of 31st March 2018, Japan recorded 3.5 million active cryptocurrency traders and marked one of the most active countries in the global cryptocurrency space. Virtual currencies have existed for years but speculation in them has recently ballooned - along with scams promising investors returns of over 1,000 per cent in weeks. In a statement, the SEC said these "potentially unlawful" platforms may be giving investors an unearned sense of safety by labelling themselves as "exchanges." The regulator said these platforms need to register with the SEC as a regulated national securities exchange or as an alternate trading system, or ATS. The US Securities and Exchange Commission said last week that many online trading platforms for cryptocurrencies should be registered with the regulator and subject to additional rules, in a further sign regulators are cracking down on the digital currency sector. ![]() The head of the European Union's watchdog said a short-term strategy could be to focus on applying anti-money laundering and terrorist financing rules, warning consumers of the risk of trading in cryptocurrencies and preventing banks from holding them.
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