A series of high-profile hacks have seen Japanese regulators ask crypto exchanges to implement strict measures meant to curb illegal activities as well as protect customers
Japan's Financial Services Agency (FSA) is eyeing stricter regulations related to cryptocurrencies, a local news outlet has reported.
The FSA is said to have initiated broader deliberations on the topic as it seeks to protect Japanese investors.
As highlighted by the local media outlet, the FSA-established group consists of experts whose primary goal is to come up with oversight for the cryptocurrency and decentralised finance (DeFi) space in the country.
In addition, Japan's regulator is also keen on keeping tabs on the central bank digital currency (CBDC) project, even as the broader crypto sector sees significant developments. Concerns that exchanges have not fully implemented measures meant to curb price manipulation and money laundering are also the reason behind the new push.
According to the report, the FSA expects to have new policies in operation by mid-2022.
Japan was among the first countries to recognise cryptocurrencies in their financial system, helping to catalyse the 2017 bull market. However, the country has recently sought to adopt a stricter stance on crypto, especially on cryptocurrency exchanges in the aftermath of a massive hack on Coincheck in January 2018.
The security breach, and the resultant loss of over $500 million worth of digital assets, saw the FSA toughen up against cryptocurrency exchanges as it sought better user protection.
In 2019, the regulator introduced new rules that demanded crypto exchanges be registered and to ensure they implement measures that put customer safety first. While the market regulator now looks to augment those efforts, recent setbacks such as that seen with the hack at Liquid exchange means a tougher stance from the watchdog is likely.
The Japan Times notes that about 31 platforms, including one of the largest in the world, namely Coinbase, have registered to provide crypto trading activities in the country. This week, major US crypto exchange Coinbase officially entered the Japanese market, partnering financial giant Mitsubishi UFJ Financial Group (MUFG) to allow customers to easily buy and hold cryptocurrencies.