The Commissioner of Japan’s Financial Services Agency (FSA) indicated that the government is hesitant to relax its strict regulatory regulations on cryptocurrencies, owing to its volatile nature.
Japan is wary about allowing public access to crypto.
According to Bloomberg, in an interview with Bloomberg on Tuesday (August 10, 2021), Junichi Nakajima stated that crypto-assets like bitcoin helped transmit money fast and at a cheap cost. On the other hand, the FSA chairman said that the reverse was happening in Japan, where residents were investing and speculating in cryptocurrencies.
According to Nakajima, who was appointed as the FSA Commissioner in July, cryptocurrencies are volatile because they lack underlying assets. According to Nakajima, the FSA was hesitant to provide public access to crypto because of its volatility. In the words of the Commissioner:
“We need to consider carefully whether it is necessary to make it easier for the general public to invest in crypto assets.”
Until the Coincheck breach in 2018, Japan was renowned as a cryptocurrency haven due to its welcoming policies. However, following the tragedy, the government enacted strict rules aimed largely at safeguarding investors.
In April, the Financial Services Authority (FSA) stated that it would adopt the Financial Action Task Force (FATF) travel rule in 2022 as part of its attempts to tighten cryptocurrency rules. Implementing the FATF travel rule would aid the Japanese government in its efforts to combat money laundering.
Later in July, the FSA established a new section to supervise decentralized finance and monitor the bitcoin market (DeFi). The Ministry of Finance in Japan is likewise aiming to expand its workforce to better monitor the business.
Crypto exchanges do not benefit from strict regulatory policies.
While existing regulatory regulations safeguard customers, the FSA director stated that most regulated exchanges in the nation find it “very difficult” to operate in the country. In Japan, there are presently 31 crypto companies registered.
The situation appears to be becoming more difficult in South Korea, where the Financial Services Commission (FSC) is enacting legislation to tighten the country’s crypto sector. The FSC has given exchanges operating in the nation a six-month deadline to comply with its real-name trading account regulation.
Banks must identify cryptocurrency exchanges as high-risk clients, according to new rules released by authorities in June. Later in July, the FSC issued another warning, indicating that international exchanges utilizing the Korean won must register with the Korea Financial Intelligence Unit (KFIU) by September, just like domestic exchanges, or face a jail sentence or a large fine.