The Japanese FSA (Financial Services Authority) is considering changing legal regulations for crypto exchanges in the country, local media outlet Sankei reports today, July 3.
The financial regulator is reportedly considering changing the legal basis of regulating these exchanges by the FIEA (Financial Instruments and Exchange Act), instead of the Payment Services Act, its current legal foundation.
According to the local media, the change in legal basis would mean stronger customer protections for crypto exchanges. The Financial Instruments and Exchange Act obliges securities firms to manage stocks and customers funds and securities separately from their corporate assets.
Currently, the legislation legally positions cryptocurrency as the same means of payment as “electronic money”. But, if the FSA starts regulating crypto exchanges under the FIEA, crypto assets will be treated as financial products. Moreover, the act will also make it possible to introduce crypto derivatives like ETF (Exchange Traded Funds).
According to Sankei, the FSA is considering new regulations for crypto exchanges because of the 523 Mln NEM Coincheck hack earlier this year. Following the hack on Coincheck, the financial regulator investigated 15 unregistered crypto exchanges, where it found a lack of compliance with laws and regulations in the companies’ operations.
Earlier this month, the JVCEA (Virtual Currency Exchange Association) introduced a new set of some voluntary rules. The aim of this self-regulatory exchange body is to make it easier to comply with AML (Anti-Money Laundering) regulations, and also stop the trading to anonymity-based cryptos like Zcash and Monero.
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