Japan Introducing ICO Regulations to Protect Investors

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Now, the funds of investors in Japan will get protection under the new set of ICO regulations introduced by the Japanese regulator.

Organizations and companies will need to register with Japan’s Financial Services Agency (FSA) for executing ICOs .There is already buzz around FSA for introducing bills that would see exchanges, payment services, and various financial instruments have their regulations redefined.

The regulations come “in view of a number of possibly fraudulent ICO cases abroad” and they would help “limit individuals’ investment in ICOs for better protecting them.”

FSA has classified tokens according to three categories: a) virtual currencies that do not have an issuer (like BTC), b) virtual currency that does have an issuer, and c) virtual currency that not only has an issuer but also distributes profits.

The first two categories of tokens come under settlement regulations of Financial Instrument and Exchange Act, while the third type is subject to investment regulations of the same act.

In recent times, Japan has introduced a number of regulations in the crypto space. Back in September, the FSA had implemented screening procedures to make sure exchanges were properly conducting risk management. It had also declared in October that stable coins were a form of prepaid payment instruments and were not subject to same regulatory scrutiny that cryptocurrencies were subject to. The FSA is systematically regulating the whole crypto sphere within the country. It has even imposed regulations on crypto wallet service providers.

All of the moves, although seeming to throttle the crypto industry, are actually bringing in due diligence and anti-fraud measurements.