JAPAN’S ICO REGULATIONS 2018

Recently, the market of the ICO (Initial Market Offering) has been involved in a lot of activity. Many cryptocurrencies like the Ethereum, Bitcoin and Litecoin are being exchanged to ICO coins by Japanese who understands the cryptocurrency market. People are no diversifying their portfolio in order to minimalize the risks involved in cryptocurrency and making sure their portfolio include ICO tokens.

People are also motivated by the opportunity to make massive profits and as a result, they are focusing their appetites on ICO assets. This is because some ICO tokens have recorded very impressive performances and have even managed to surpass the appreciation rate for Bitcoin, Ethereum and other types of cryptocurrencies.

Researches have shown that about 3.4 million Japanese had sometime purchased Bitcoin and some are still holding onto it. This is not limited to individuals and small businesses alone; it also involves big companies who are launching ICOs in order to enable them expand their operations.

As a result of these, the FSA, Japanese Financial Services Agency, which is responsible for overseeing banking, securities and exchange, and insurance sectors of Japan, have waded to the matter. Since the agency is responsible for the stability of the financial system of Japan, they warned about the risks of ICOs just last year.

They agency focused on two risks.

First is the volatility of price that concerns the tokens and the other is the possibility that some ICO projects may be scam. They then advised investors to be very careful of the risks and that people should do deep investigations before taking any action.

They have issued several warnings to a cryptocurrency firm based in Macau, which is soliciting interests form the Japanese residents. The agency even went ahead to publish a formal statement on its website.

However, this year, Japan has been making moves to legalize ICOs even when other countries like the United States and China have restricted the fundraising technique.

A study group backed by the government created some basic guidelines and regulations for the adoption of ICOs and rules to identify investors, prevent money laundering, track the progress of projects and protect existing equity and debt holders. One of the study group’s general adviser is a man who was the architect of the law that made cryptocurrency exchange legal. All the guidelines are actually different from those of China and South Korea.

The regulations are set to be put in place and are still under deliberation and to be made permanent in the future. The guidelines and regulations are set to focus on the protection of the investors and fight money laundering.

Points from the report showed that identifying ICOs as financial securities was avoided and the United States Securities and Exchange Commission have argued that this makes some of the ICOs fall under securities laws which are very strict.

An expert in Japan believed that since ICOs are technology of groundbreaking proportions, good principles and rules can easily be implemented and in consequence they will be permanent way of raising funding.