Japan's Financial Watchdog Certifies Two Cryptocurrency Regulatory Organizations
Japan’s Financial Services Agency (FSA) has certified two local organizations as Certified Financial Instruments and Exchange Associations.
The certification process offers protection for cryptocurrencies such as bitcoin and ether, and clarifies what types of financial instruments can be used within the community. With this accreditation, the Association will provide clearer rules to Japanese investors on how to manage and use virtual currencies like bitcoin and ether
According to an April 30 announcement, the FSA has recognized the Japan STO Association and the Japan Virtual Currency Exchange Business Association (JVCEA) as self-regulatory groups for derivative transactions and security token offerings of crypto assets. JVCEA will subsequently be renamed the "Japan Crypto Asset Trading Business Association" on May 1.
As was previously reported by Tech President, the former then newly reorganized JVCEA accepted the FSA's self-regulatory status on April 30. The announcement notes that the JVCEA in the past has met with regulators and various financial regulators throughout Japan and is expected to expand its participation in this program into the future.
The JVCEA will also be able to handle the management of virtual currencies themselves, as well as provide a referral service for Bitcoin/crypto exchanges. The FSA will also issue licenses for the sales of bitcoin and other cryptocurrencies to individuals and companies, as well as license those individuals and businesses that sell software that works with cryptocurrencies and other virtual currencies.
In their activities, virtual currency exchange companies can profit from unexpected and unpredictable developments. Market instability is in part a result of extreme interest fluctuations in virtual currency with little solid foundation in underlying assets (commodity speculation and investment opportunities). Such extreme interest fluctuations significantly exceed the liquidity of the virtual currency market and, in turn, severely limit the ability of virtual currency exchange companies to use their capital to operate and have adequate capital to develop their business.
A spokesperson for JVCEA said the organization received the necessary registration and business licenses to expand into the fledgling Japanese derivatives market in May. Meanwhile, JVCEA has submitted the final application needed to gain accreditation as a derivatives clearing and settlement (DBS) center by the Japanese financial regulators. The FSA also granted it accreditation.